Dispel Magic will take out his blur effect & also his flame sword.
Web can leave him stuck if he fails the save.
Wand of monster summoning is very good to keep him busy.
Fire & Ice will hurt him.
Magic missile.

Potions of Strength, Heroism, Invulnerability, Power. Spells/Scrolls of protection from fire. Best armour and DEX you can manage, and pound on him, but do NOT use missiles of any kind, or waste elemental offensive spells. He is classed as a Monster, NOT Undead, so don't waste time with Cleric stuff.

Here are his raw stats:

Has 78 HP

STR - 18/10
DEX - 17
CON - 15
INT - 11
WIS - 14
CHA - 13

Natural AC -2
Base THAC0 - 8
Attacks per round - 3

Grand Master in Large Swords

Helmet
Plate Mail Armour

Flaming Sword:
.. +4 THAC0
.. 1D2 +4 Damage
.. Bonus 1D4 Flame Damage (Damage not dispel-able, only effect)
.. Adds Strength Bonus

Unique Ring (Permanent immunities to): Panic, Poison, Sleep, Fatigue, Petrification, Confusion, Berserk, Charm Creature, Paralyze, Slay.

Ring of Blur (Dispel-able)

Resist Electricity - 125
Resist Missile - 100
Resist Acid - 50
Resist Cold - 50
Resist Magic Cold - 50
Resist Fire - 50
Resist Magic Fire - 50

Save vs Polymorph - 7
Save vs Spell - 7
Save vs Breath - 8
Save vs Wand - 8
Save vs Death - 10

Resist Crushing - 0
Resist Magic - 0
Resist Piercing - 0
Resist Slashing - 0

Hey I am at this place called Ulcaster and there is this Dwarf/Gnome there that want to trade me a Gem for 1000 gold, But I want to is the gem basically worthless?

Yep. He's trying to cheat you out of a bunch of gold.

If you have ever felt like really getting even with a scamming lowlife, kill the little runt! :D

I am at the Firewine Ruins and shit its kind of hard, mostly because I think the Kobolds respawn after I save and load , so if I have to go in this dungeon, I have to do it in one try?

It has nothing to do with saving and reloading. The Firewine Ruins is a high respawn area -- just try resting in there!

I hate dungeons like Firewine because they are so small that I cannot move all my party members, because of this I send my strongest character alone with the aid of Imoen to find traps.

I usually send Imoen ahead (stealthed), with a mage (or maybe Bard) for backup. The mage can then take out clumps (the dangerous encounters) with AOE spells or wands. A Wand of Sleep or Wand of Fireball is just great. Just make sure that Imoen has the best bow and ammunition you have, so she can take out the stragglers -- her Strength is too low for melee.

If you leave a character at the respawn points, I believe it prevent them from respawning. I could be mistaken, but give it a try.

I don't have killing AOE spells but this dungeon has scrolls that does like "Death Gas"? so I might aswell conquer it, also this quest has a quest giver in Gullykin, A Halfling that is, but when I talked to him about the dungeon, the "Your Journal has been updated" did not pop out?

The quest giver in Gullykin is inconsequential. It seems this 'quest' was an afterthought, and nothing comes of it. I think you get a measly amount of gold, and no XP as I recall.

Quick Question: Is it evil going to the Xyvert Village, I was exploring and I found htis village full a Xyverts and a Bear Cave?

No, it's not evil. If you approach them they are immediately hostile, despite their leader Nexlit's assertion that you kill them "for nothing". Again, it's a quest that never actually came to fruition: one of the NPCs (Hulrik NE of Nashkel, whose cow Nessie is being attacked by Xvarts), asks you to rid the Sword Coast of their (the village) menace, but nothing comes of it, and it doesn't get recorded.

So this game is in a way unfinished like some of Ultima 8's Quests?