Before I started the council of seven mission, while wandering into the forest, I noticed all the elves in the elven village had been slain. I didn't think much of it yet. However, after getting six of the members into the council, and the last member remaining being the elf, the elven village still laid in ruins. Is this a glitch? I have no idea why this happened, and because of this I cannot progress. I don't want to go too far back into the save states, not only because its too long to do all over again, but because I don't think there's a guarantee that the elves will be alive. Judging by the small map shown on the corner, I can see that there is bloodshed, which should be the default layout of the area. However, I remember playing the game earlier in my childhood and remember talking to the elves way back earlier on in the game.

Just out of curiosity, did you put defeat the ghost in the stone near the Elven Ruins and keep the sword? If you don't complete all of the Dark Forest quests first, the ghost (Death) will wipe out everyone in the Dark Forest, as I recall, and make it impossible to finish some of the quests...or all. Been a while, not sure about that.

At a guess, that's what happened and you'll have to go pretty far back in your saves to progress.

No you are right, I tried to kill that ghost but it kept coming back, so I just left the area. It sucks that that has to ruin the quest and potentially the entire game now

Bummer. I hate having to retrace my steps, too, but if you want to go on with the game, put the sword back in the stone after you defeat the ghost. That will lock him in. I know it's a long way back for you but IMO the game is absolutely worth it.

The ghost doesn't kill the elven council member, who should be on the west side of the elven village. To get rid of the ghost you needed to place the sword back into the stone (screenshot).