Easiest way to get this quest to work is to go straight down as far as you can to the bottom of the zone as soon as you walk in. Then when you climb down go as far down and to the right as you can before talking to the NPC. For some reason being too close to the barrier spawns a health bar too early on it and the NPCs will no longer attack it.
You have to stay as far away from the blockade as possible the moment you walk out of the portal until the NPCs engage it themselves. No amount of resetting the dungeon will work if you trigger this health bar glitch by being too close to the blockade.