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After finding and killing the vampire who murdered George, I exposed him to the watch, then went to tell Mordaneus that I'd solved the murder. However, I no longer get the dialog option to talk to him about George. I realize there is a bug where this can happen after you start the Council of Seven quest, but I haven't started that yet.
This question / problem has been solved by Stuffimage
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skwarde: After finding and killing the vampire who murdered George, I exposed him to the watch, then went to tell Mordaneus that I'd solved the murder. However, I no longer get the dialog option to talk to him about George. I realize there is a bug where this can happen after you start the Council of Seven quest, but I haven't started that yet.

Look at your quest log and see if it shows the quest as failed.
Quest breaker - When you finally get to expose George's murderer, make sure that you tell the guy that you recognize him from Aleroth. If you don't do that it breaks the quest. Go to a save prior to killing the vampire and be sure to tell him you recognize him in the dialog exchange before you kill him.
You may not be able to complete the quest if Mardaneus joins the council before you kill the vampire and talk to him about it.
Edit: If the quest fails you can still complete the game. It's not a major game quest . . . =)
Post edited April 26, 2010 by Stuff
Thank you Stuff. I checked all those things, and everything seems to be a-ok. My best theory on why this isn't working, is that I'm not a high enough level to get any more ranks in restoration, which is one of the quest rewards. I may have to wait for level up.