I can't remember what they are called but right next to the dwarf village is another village of creatures. It's those creatures that you have to kill...and you have to kill a lot of them :).
depending on what level you are also outside of aegirhamn if you follow around to right is large camps of morvalts or anywhere you can find morvalts kill them till you make them extinct you can get faction that way without haveing to swim to mod to get it