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Seems like after beating her in the Winter Palace you have to capture her and send her to either the Wayfort or the frosthound. From what I've heard the former turns her into a demon, which is a big no-no for pure PCs and Garth deserves better than having a random corrupted asshole elf dropped...

When returning to the Highlands Spring after the initial meeting with Isla: "The air is crisp and clear this high up, and you’re afforded a great view of the [dt] and surrounding lands - if you squint just right, you think you can see Rigard from here."  

Encountering Lei in the Residential Area with the party consisting of only the PC results in this: "You stare into the deep shadows of the narrow alleyway. There is so little light that despite your night vision, you can barely make out what’s inside. Even if you brought PC with you, you would...

Kia's dialogue about some expensive carpets appears if the PC is the only member of the party. It does not appear if Terry is there as well. The offending passage, for clarity: