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All he leads you to is another Guild; there's tons of other stuff you can do - explore the island (it's huuuge), other clans and guilds.
Kill some annoying people.
Kill some annoying beasts.
Run back very slowly.
And he might have a new job for you.
No, the whole point of the game is defeating Dagoth Ur... without him you can't do this.
When he says 'he's not ready for you yet', what he really means is HE'S NOT READY FOR YOU YET!
Try sleeping for one or two days and asking him again.