Sadreda has determined that the Dark Warden which you slew was but a servant of a more vile creature known as the Mad Captain.
'The final step of your quest will take you into great peril. I believe this Dark Warden you slew was but a servant of another creature we call the Mad Captain.
'Gather your friends, ${PLAYER}, and head into the Dark Delvings, south-east from here. Once inside, you will need to use this charm to summon the Mad Captain. Look for a foul altar, and place it there. The Mad Captain will be sure to come out then.
'Rid Moria of the Mad Captain's foul evil, then return to me.'
The Mad Captain dwells within the Dark Delvings, south-east from the Shadowed Refuge in the Foundations of Stone.
Sadreda instructed you to use the crude charm he gave you to summon and defeat the Mad Captain.
Sadreda is at the Shadowed Refuge in the Foundations of Stone, north-west from the Dark Delvings.
You should return to Sadreda with news of your victory.