IF you still have questions, I read about this encounter yesterday. There is a named mob in Oceanus Hesperos called Night Teror. he is a rare night spawn, and when killed, he splits into two mobs (both weaker than the first), then when those mobs are killed they split (making 4, weaker than the 2 again), then when those mobs are killed, the mobs split into two again (making 8 weaker mobs). When they're killed, the artifact should drop (not sure if it's a 100% drop, though).
Scrolls for the Gem of Lost Memories drop off of harpys and statues in Hesperos. All are easy to farm except 3/3 I hear.
Once you have the Gem, and all three scrolls, you can use 1 of the scrolls like a potion on your hotbar (it will combine the 3 scrolls into one book) then find the right scholar to give the artifact gem and the book too.. voila, your Gem of Lost Memories is activated and ready to be used.