The husks are a body drop, not auto update. The ghouls do not have to con blue or better to you, but the husks will drop much faster on non-green ghouls.
When you get the husks you will be told that you have all the ingredients needed for making the mask, but this is not true if you have not yet harvested the roots.
Return to Ihriel and use the magical cauldron near her to create the mask (If you fail you must drop the quest and restart it.)
Using the mask will turn you into a Veil Hunter. You must then hunt malicious spirits within the village which were previously invisible to you. Kill 7 of these to get the quest update.
Note: Stand back from any environment items, like the magical cauldron, or the fence, and so on, when using the Mask. Your Veil Hunter form could spawn trapped inside these, and you will have to cancel the spell (from your effects window) and wait for the Veil Mask to be usable again.
Note: Try to pull the spirits close to where you body fell, when you transform into the Veil Hunter. The group/raid buffs you had on can come in handy in the Veil Hunter form.
Note: Related to the previous note - If your Veil Hunter dies next to your combat pet your combat pet will be able to see and attack the malicious spirit.
Return to Ihriel to get your reward and open the next quest. You may find that you cannot hail Ihriel when you complete the quest because you are invisible to her, so use the /camp <yourname> command to end the Veil Hunter effect and complete the quest.
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