Cotti and Nios are the elderly couple sitting next to the rather elaborate harp in Thelran's Inn. Speak to both of them after Sed has joined your party. They will both lament the harp's state of disrepair. Sed will volunteer to repair it, and after a brief blackout on screen, will present a fully-functional harp to the nostalgic couple.
Note that after the repair has been made, you will now hear harp music in Thelran's Inn for the remainder of the game. You receive 19 Cape of Illusions for your trouble.