This item is carried by Malkus, and must be taken and put inside the Weystone Source in order to free the Moth Priest from his magical cage inside Forebears' Holdout. Once it is in place, it cannot be removed.
The only way to acquire this item without the use of console commands is to cause a glitch to occur. For unknown reasons (possibly due to one of the vampires defeating Dexion Evicus before freeing him) he will sometimes appear outside of the barrier. If this happens, you can talk to him normally to progress the quest to the next stage without having to actually place the Weystone Focus into the Weystone Source. Once you finish the quest, the quest tag on the item will be removed.