Go to the Tarantula Lake and search for the character named Evelyn (she appears around the lake at different locations). She will only speak to you during the night. Tell her Will-O'-Wisp Ring and she will ask for a willow bark pouch, which you obtain from the quest Save the Little Tree, and an iron ring (which can easily be found on Arakas).
Once you have both items, return to her and tell her again Will-O'-Wisp Ring, then Yes, and she will give you the Will-O'-Wisp Ring.
Note: If you have multiple Willow Bark Pouches or Iron Rings, drop them all on the ground, or Evelyn will not give you the ring.
Reward:
You can repeat this quest at will.