He got in trouble with a so-called "witch," Sosia Caristiana. Apparently, Wine-Sot got a bit too friendly with the witch. So in turn, she put a sleep spell on him. She then took all his clothes and other items, including his beloved Cloudcleaver. She believed he was too angry and decided to not give him the axe. Instead, she tells the Nerevarine to tell him that to get the axe, he must wait three days and head to the Mages' Guild and talk to her. He, not quite enjoying the thought of waiting three days, will get angry and demand the Nerevarine pick a side: Him or the "Witch."
Picking Him: Receive two points to strength and anything on Sosia, and maybe Cloudclever (if Hlormar is killed, of course).
Picking Her: Kill Wine-Sot and Sosia will thank the Nerevarine. Also, with her thanks, she will reward some health and fatigue potions.
- If asked about his trade Hlormar will mention his father, who was apparently killed by "Snow Elves." He probably means Falmer by this as true Snow Elves have been extinct for years.