In a bit more detail, a key from his hidden room (with the chest that requires a password) opens a chest downstairs, to give you the book the librarian is looking for. This book is volume one of a set, containing the spell Amdusias used to turn himself into a dragon. The librarian will give you volume 2, which has the counter-spell. Reading that book from your inventory will turn him human, if you have the scales and vial of blood (in the hidden room; looks a bit like a candle).