"A wispy trail leads up and to the west!" - leads further through the mountains (Wurmscale Barrens) to the tunnel entrance ( 697, 221, 825 ) Copy/waypoint 697, 221, 825
When standing at the last spot the trail leads one to (698.11, 221.31, 827.36), the quest does NOT auto-update to the last prompt, while still prompting to use the bones. Having arrived at the last spot at the top of the trail into the Crusader's Cave entrance, after it says to cast the bones then do that again to receive the emote to move West. Then you just need to move further into the cave mouth before the quest will properly update to the next prompt. Esentially you need to 'encounter' the Crusaders inside the cave mouth so the quest will tell you to convince them to trust you.
Get the armor from "a dead crusader" a bit on the way back on the road to complete the quest. Keep looting corpses until you get the auto-update to complete the quest that will give you the disguise in order to start the next quest.