Thoughts on the scenario after completing "Hammers of Fate".

I don't know exactly how he got it, or where. I played through the entire original game and Hammers of Fate, but I couldn't find it anywhere. And I still don't understand – in the last dialogue scene in Hammers of Fate, Biara sheds the guise of Isabel. What does Alaric do next?

After this video, Alaric kills Andrias and brings his blood to Biara, and with her help, Biara "reworks" the griffin's heart and then uses it to summon demons in the Claw. And I think Alaric went crazy after this scene and stopped distinguishing Biara from Isabel, which is why Biara could give him orders in any form.

Added 10 minutes later
Or Biara was a master of hypnosis, because appearing in the form of a succubus to the empire's chief "demon-fighter," even if he's a bit unhinged, is quite dangerous.