I started the quest by accepting it for the tuition refund. I had a very easy time killing the Red Death. Even got the Quiver of Rage as a reward in my backpack.
I have 23 gore fiends and 4 rotting corpses to go. I suddenly got a Bloodwood Spirit in my backpack and a message that stated I was released from my blood oath. Any CLUE what this means? I asked to those around me, who stated "you can go outside now". I asked others on ICQ who are just as clueless.
I am banging my head very hard on my desk here.

Not sure why the Spirit dropped, unless you were partied with people, or still had some summons/pets dealing damage to one of the minis in there. Its one of the ML arties that drop off of any "named" creature in a new dungeon....

Blood Oath is a necromancy spell that is now in common use by and undead type spell casting monster. In Bedlam, this would be Master Jonath, and anyone with "the Necromancer" after their name, possibly among others. It is a timed spell that is a reflect damage spell...the effect wore off (possibly time limit reached or death of caster) and you got a message stating so...

Ok Necro-capable monsters do a spell called blood=oath....so one of the monsters or one your necro guildmates hit you with a blood-oath spell. When it wears off it says that the blood-oath has been broken.

As for the bloodwood spirit....you got a minor artie! Yay!

Wow, this means I got 2 minor Arties on my OWN! (Quiver of Rage from the Red Death) I was not partied with anyone nor was I down there with anyone. I have always been a solo player (I know, bad with ML) but finally got out of the solo areas and decided it was time to be social. The blood oath spell would have been from a monstie then. Interesting.

Ok, this means I must go back there and finish. Ugh. I hated dropping my karma killing unicorns! I felt dirty doing so!

To be honest....dont even bother with the bedlam quest...just keep it running in your quest thing....you dont get a mil back...you get a silly bag of trinkets.

I kind of figured it had to be too good to be true.
If I end the quest, I don't get to go back in ?

HMM not sure about that I know once u finish the quest u can go back anytime.
but for now just hang on to the quest so u can keep going in and eventually u should be able to finish it

FYI, if you ever need to do this again on another charactor, get a tamer to tame the unicorn and release them. For a certain amount of time after a tamed unicorn is released, you should not loose karma for killing it. Same is true for the Ki Rin also. Lastly, you can always have a different charactor just collect the parts as you don't need to be the one that kills the Unicorn/Ki rin/ Pixies, you just need the items quested to finish that part. As for finishing the quest, you are aloud like eight active uoml quests at a time. Keeping on the quest lets you in Bedlam just like keeping on the dreadhorn quest lets you enter the twisted weild. Bonus to finishing it is that you dont need to idle on a quest for entry. All in all though, not a big deal.