Socratatus: I see. Not having a go at you and I appreciate your response, but that`s not logical for the quest. I didn`t know the quest was evil. There`s no indication of anything evil in the quest at that point. The mage wouldn`t join me because I was too "good", which was the only hint I had that he was possibly evil, but the actual job to me was to find and retrieve whatever was causing the dead to rise. This would stop the dead rising which, surely, would be a GOOD thing, at least from the info I had
at that time. Also, how does the Dwarf know it`s evil? All I did was kill zombies, that are already dead. So I guess I just have to leave the job if I don`t want to do more accidental evil and the dwarf leaves.
NPCs and followers can detect your current alignment, and react to changes in it. As a workaround, you can [even at this point] ask Magnus to wait, finish the quest on your own, hand the gem to Geoffrey, then kill him if you'd like (make sure you're out of the eyes of Magnus and the town guards), ask Magnus to rejoin you, and sell the gem elsewhere later.
In the future, if he gets grouchy or his reaction dips, give him some Dwarven snuff. It exists in the game for this very purpose; elven wine works the same way on Elves, as well as on Sogg Mead Mugg the alcoholic half-ogre. It just won't work forever, which is why I also suggest the workaround I just described.
As far as Geoffrey, he wanted the gem for his own nefarious purpose: to raise and control the zombies himself, because he's a bit evil, privileged and lazy. (However, once he gets it, nothing else actually happens; that's because he's also a potential follower, who will join you if you're evil enough. I mean, if you don't kill him in the meantime.)