Trying to summarize what happened for me with my last two hand-ins.
Puppy was OUTSIDE of inn just a bit away in a corner near inn exit.
Gave him the spiritcaller beads - got usual response text 'go to Anguish etc etc'
As i had the orb already i gave him the orb and got normal response text telling me i should say 'I am prepared for the ceremony' ' Did just that and only got a dumb look from the spirit and deafening silence
. No combinations of 'prepared' or 'ceremony' would work.
After a bit of sweating and horror images of redoing the final steps i i told him 'I am a faithful heyokah' and got my epic 2.0 (woooot).
Elder Spirit despawned after a few seconds - i ran up to inn room and there he was again. When leaving inn i saw the other spirits (of might, patience and so on) spawn one by one near the spot, where i talked with Elder Spirit and gave him beads and orb.
So it seems the hand-ins are ok mostly, just the pathing and flavor events around the hand-ins are terribly bugged.