New zone is available without completing this quest or others in Kashay. My alt questline is in Hortek, she had no problem with getting Stillwater questine activated
That may be true. But this q is part of Morrok-line which provides by far the most progression. Getting stuck here only leaves you a few minor lines which are done in little time and leaves you without hardly any progression.
If you are at that point when you need that quest, you are halfway done with Kashay. Yes, you miss the quests post-that one and anything unlocked by questline. So, without it, a chunk of XP is lost. But, it is not a huge chunk, because it is the last zone for Morrok/Toni line. Next zone questline is independent and available even if you are stuck at this quest.
Don't take me wrong, I myself hate this quest with the passion. It is the worst designed main questline chain, making Panilor armor quest to the second-worst. But, it doesn't lock you out of that much XP and it doesn't lock you out of the Stillwater main chain.