Open the iron door Svaknir stood before with key or pick, and you can loot a high-value chest, swipe a Potion of Prolonged Invisibility from beside it, and possibly obtain a worthwhile weapon from the stone table it sits on. Then pull the lever on the wall to open your passage back towards the surface. The tunnel brings you to the very first chamber you entered in the entire dungeon, so step through and head up the short hallway so you can return to the Bards’ College.
When you return with your findings to Viarmo, the old elf is surprised- he wasn’t expecting the thing to actually be there, he was just taking a reasonable gamble based on Giraud’s findings. Unfortunately, when you hand over the verse to him, he has little good to respond- not only is a large portion of the writing smudged to the point it’s unreadable, but what still remains is of poor quality, lacking rhythm and having poor rhyme if any at all. This is certainly not the sort of thing that can be publically read to the credit of the College.
He goes on at length about his disappointment- the yearly Burning of King Olaf has been held for longer than anyone around has been alive, and without something worth showing to Jarl Elisif and publically reading for the burning, there is no way that she will repeal her decision to ban the burning of the effigy for this year. When you suggest that he make up the missing parts of the verse, he comments that it may not be appropriate, but he could imitate Viarmo’s writing style. He has no idea what happened in the spaces in between verses, though.
Fortunately, you’re there.
You will get to select the pieces that Viarmo adds to the section on King Olaf. The first part you add gives you a Persuade option you can take, to make the tale more unusual and fantastic- and get a greater reward from the court for the college. If you succeed the first Persuade check, another one opens up later on down the line to further boost the value and reception of the verse. You can, of course, keep things toned down and take the less fanciful options, but this has no effect on any subsequent happenings, so you probably might as well.