What I did:
1. Find letter.
2. Go to the Doemenel manor (have same convo with guard).
3. Leave and go to Lord Reymont. Talk to him and finish the quest.
4. Enter house via window and steal the diamond. Wish there was a way to use it for an alliance with the dwarves (as LR tells you why the diamond is so valuable... or at least have some use of it)... This feels like an unfinished quest indeed. LR could have quickly secured the diamond after the quest was done at least.