Edit: I have been corrected with the name of the quest, and with the fact that this is a known bug since Mod 5. Since I can't delete the thread, I will at least fix the errors and leave this here for my thoughts on what exactly is happening. I had not seen it listed on the forums before, so maybe this will increase its visibility.
I submitted a bug report on this, but I wanted to see if others are having the same problem. Last night, I was running The Shadow Crypt (the one that is the maze within a maze, and where you do your second upgrade to the Emerald Claw/Silver Flame amulet). It was my first time, and an interesting idea for a quest, but our fun was interrupted by a major bug. Whenever we would enter a water room and would exit, the game seemed to be in some strange state. It would look like we were in a room with water again, and with walls, BUT we could swim thorough the walls, and sometimes would be attacked by monsters that we couldn't see. We also could not see our characters. We thought that the instance was bugged the first time, so we exited, dropped and reformed the party, and reentered. Unfortunately, we experienced the same problem again.
We WERE able to finish the quest, since after going through a few bugged rooms, we were able to get back to non-bugged ones. What I think is really happening is that when you teleport to the bugged room, you are changing levels, but your camera is not. You camera stays in the water level, and the character is actually at one of the other levels (usually the one that has just a chest, flame, or the pyramid, since it didn't seem like I was moving through a maze).
If you are going to play this quest, remember that you can finish, but once you try to exit a water level, you will not see your character. My advice is to simply back up upon entering a bugged room. If you hold 'S', you are less likely to be attacked by mobs since you will be exiting the room before getting aggro. Be patient, and you can get through it.
To Turbine, this is a pretty major bug, and I would recommend at least a note when loading DDO and possibly closing the quest until this is fixed.