The Axe in question is just north of Fort Ancylis on the sea floor fairly close to the cliffs. The quest giver explicitly states that an artefact needs to be recovered and as far as I can tell it is the only one down there. However it isn't possible to pick it up and return it. Looking at the claim for Teyn from 2012 (http://tamriel-rebuilt.org/old_forum/viewtopic.php?p=311743&sid=8e481f4f...) there is a comment from one of the developers about making the Axe unactivatable before the quest, which could be related. Although my journal has been updated properly at each stage (speaking to Jo'Agghu, then Shorveir, then Apphia Calanius) and it seems odd that it would become an issue five years down the road from when that decision was made. I'm guessing that the script to make the Axe retrievable is broken, but I don't know how to go about investigating or verifying that.