After you decide to help Angof the Undying, you must meet him at the South-Western platform of the Cliffs of Failure. He then tells you to defeat Estre's and Thalik's Champions.
After they are defeated, return to the cave entrance and talk to Juline Ginis.
When you enter the cave, the Observer summons two Watchers as final challenge for the player. After defeating them, return to the Observer's Watch, where you must defeat him.
After that, enter the Portal to Coldharbour and talk to the Observer who seems to be alive despite the player defeating him. You must then choose to rescue either Angof or the mages (or you can intimidate the Observer to release both).
He agrees and teleports you back to Coldharbour, where you can receive your reward from Angof.