But you want to know about Tethyr. I said I'd make you a deal, so here's what I want you to do. I'm working on a new line of baits, but I haven't tested this one yet.
Just take this paste -- yeah, it smells a little foul -- smear it on yourself, and swim over to the wrecked ship to the southwest. If you survive, let me know how it works!
Remember, the deal is "don't come back until something bites you."
Not bad at all, but you know, I think I'd get a bath in as soon as possible, if I was you.
Now, about your sea monster...
Help yourself to a brew or two in the meantime.
You will receive
Apply the lure, swim to the shipwreck and then swim in the area until a level 37 "Lurking Shark" aggros.
There are two shipwrecks in the area. Swim around the shipwreck that is to the west (a tiny bit south, but mainly west).
Best approach is to apply the bait where you receive the quest then swim towards the wreck. The shark will attack you as you approach the ship. killing the other mobs around the wreck prior to applying the bait makes this easier.