To find the Horadric Malus to deliver to Charsi, you must first make your way to the Black Marsh. Find the adjacent area, Tamoe Highland and continue through it until you reach the Monastery Gate. Inside of the Monastery find the Outer Cloister area (Waypoint available) which leads to The Barracks. After defeating The Smith, you can retreive the Horadric Malus from the weapon rack nearby.