Great writing, but something missing
I'm going to start with a good thing: since this story, your writing has really developed for the better.
Read the story now
I think you had a tendency to brush over things that needed to be focused on more. Like when the little man is discovered, it seemed strange that Houndal would just accept his presence as something real -- much less accept his offer. It felt rushed to me, and that's my main point of criticism. That's the reason for the pull down to 3 stars in plot (I didn't want to take another from writing style because your style is actually really nice).
I couldn't see a deeper meaning to the story, other than, of course, stick to your end of the deal. But it was a very fun little story that I thoroughly enjoyed and which kept me interested throughout.
I loved the incorporation of traditional myths (I would've liked that you delved into the Narcissus stereotype more, but that's just me being in love with the Echo/Narcissus storyline) and the setting was really well done. Even though you never explained the bar, I could still *feel* it somehow. You were good at getting from one scene of interest to another. And, like last time, your grammar is near flawless!