It is apparent that something evil happened here, and is apparently responsible for undead spirits lingering here, which will become apparent when you first notice the spirit of an orphaned child. There will be a lot of containers with random items in the various rooms around here, as well as a variety of foes for you to take on.
Here is the initial entry point, and the way back to the Elven Alienage.
Once you get past these doors, several rabid dogs will attack you.
In this room, the spirit of a Tormented Woman will attack you. Won't be much of a challenge for a full party.
Here you'll get attacked by several Riotous and Rampaging Spirits.
Here you'll be treated to a cutscene that indicates that a Rage Demon, or more than one Rage Demon, is responsible for what has befallen the orphanage. One of the Rage Demons will attack the party. A few Shades will also help out the Demon.
Here are some more Rampaging and Riotous Spirits.
Here you will get attacked by several Rage Abominations.
Another cutscene, and another Rage Demon to fight. Ser Otto will speak triumphantly, only to get impaled from behind by a pitchfork. An especially powerful Rage Demon, the one apparently at the bottom of all this, will then attack you. Be prepared to occassionally move your party members to another part of the room, because this Rage Demon will sometimes cause a gout of flame to spring up from the floor, causing constant fire damage. It will also be helped out by several lesser Rage Demons. Take out the big one first, since it can be done somewhat quickly if you pack good melee skills and cold spells.
Once the fighting is done, a chest in here will have the Worn Amulet, which the Deranged Beggar outside will appreciate.
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"*I AM NOT FOUND WANTING. WHERE MERCY LIVES, I SHALL KILL IT. WHERE COMPASSION POISONS THE HEART, I SHALL BLEED IT FROM ITS VICTIM. WHERE LIARS AND BETRAYERS OF TRUTH FOSTER LIES, I SHALL ANSWER THEIR LIES WITH JUSTICE'S BLADE.*" -Vhailor, Planescape: Torment