Exit the town to the north, turn right at the first intersection and then take an immediate left down the stairs. When you approach Shyla will break he bonds and attack. At about half health she will put up a shield and summon skeletons to her defense. After the third skeleton is summoned she will reactivate and you will need to kill her. After she is dead make sure and use the Soul Reclimation Device to collect her soul. Return to the Faceless Man for your reward.