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When the Fellowship expedition reached Serpent Isle, they erected their camp outside of Fawn, together with a Blackrock Obelisk that would later be used by Batlin to enter the realm (destroying the obelisk in the process). The city of Fawn didn't want them inside the city, since they saw them as heretics who only disturbed the inner peace. This conflict was only resolved when the conspiracy around the Oracle of Fawn was unveiled.
But this was only of short duration, when Mad Iolo killed everyone in the camp, with exception of the ugly Ruggs.