Altho' this is a Necro*, might as well comment, since it's a
reoccuring point of confusion...
(* when using Search, always read the dates on previous posts
before hitting "Reply", folks)
Questgiver instructions are perfectly correct and clear - he tells you to
dissolve the staff, simple. The problem is that the in-game terms "deconstruct", "disjunct" and "dissolve" can easily become confused between themselves.
The quest giver gives you a "completely useless" magic staff, meant to be dissolved, aka melted. If you still have that staff, or a "blanked" version of it, in your backpack, the tutorial will
not advance.
To advance, you need 1) no evidence of that staff in your pack (destroy it, bank it, sell it, whatever), and 2) at least 1 Essence (NOT in your green bag).
The quest giver then gives you a semi-generic
mace to "blank" and make into a +1 item to complete the tutorial.
(For any new Players, a CC'd ML 1 weapon is pretty useless, as effects increase significantly at ML 4. So don't get tricky and bother making something else, just make the mace, get the reward, then melt that mace for an essence and wait until at least ML 4 to make a weapon that you'll use.)