I went to his room, opposite the big bell, attacked him & he dimension doored out.
I killed everyone & checked the loot for his badge, but he never came back.
I've slept in his room & checked downstairs.

Do you have one of the tweak packs installed, such as Unfinished Business? If so, I believe it restores some cut content and behavior, which means he teleports all over lower Dorn's Deep (rather annoying). Go outside (where the small tower is where you first entered Lower Dorn's Deep) and see if he's out there. Failing that, if you've talked to Ginifae and promised not to harm him and also have Marketh's portrait, you can get a fake ring made, then talk to Ginifae again. She'll replace the real ring with the fake and then when you confront Marketh he can't teleport away. Then you have the choice of killing him or, if the character talking to him has high enough intelligence, you can talk him into giving you his badge and all his gear. I did the latter in my last run through.

Yes I have Unfinished Business installed.
And later on I was out where you said & I got the Text show up "Marketh Dimension Door" ,"Marketh Dimension Door" But never actually seen him.
I had the Portrait, but drop it after I killed the bloke who drew it. ( I might be able to find it if it's still on the ground.)
But I have already told Ginifae that I am going to kill Marketh.

Edit: Well the portrait is no longer where I dropped it, so I'll have to go back to a Chapter 5 save.
If the mod makes the portrait essential to finish the game, it should tell you to hang on to it.
I'll be uninstalling that mod if I play through again.

It's not essential, but it makes things much less... tedious. If you want to, you can try to follow Marketh around when he teleports and keep beating om him. Eventually you'll do enough damage to stop him from teleporting. But, as I noted, it's extremely tedious and it's not hard to understand why they opted to change this for the game's official release.

I am also having real problems finding Marketh, after installing the Unfinished Business. Can you clarify exactly where he appears, I am not sure (or can not remember) this tower that you refer to that is outside?

Check out This Screenie from the Gamebanshee walkthrough. It's been a while, but if memory serves, he appears around the tower marked number 2 on that shot.

If not there, then search around the area marked number 1.

yeah if have the portrait, norl the jewlmaker "3" (on above mentioned map) will make the ring replica...

marketh will then return at first place the party met him