In the first part of this quest you become a werewolf. You immediately turn into one. Whilst you are a werewolf you can kill anyone without getting a bounty. Eventually your screen will go black and, once you load, you wake up as a naked human again.
Inside Gallows Rock you mainly run into Silver Hands who are tough. Especially now that you are a werewolf and silver blades do more damage to you.
In the end you run into Krev the Skinner along with a number of Silver Hands. The best way to deal with the Silver Hands is to sneak and use a bow and arrow on them. They will drop fairly easily, but I found that Krev the Skinner takes a lot of arrows to kill. Whilst in combat with him be sure to keep an eye on your health. In Gallows Rock there are many corridors which you can use to retreat because you run faster than enemies. I usually like to retreat and heal with magic at the same time to avoid having to use expensive potions.
Full Walk Through YouTube Video