Military action
As the great evil got sealed and people returned home Garhun Crystalgut II began consolidating the land around him. During the war, he had what little land was previously gained of the Refuge Woods. Claiming that the world trees had only stopped the war in preparation for the great evil, this forest was now ripe for claiming.
The Refuge Woods had never had a stable populace, largely consisting of whomever could find relief from their curses there. During the war against the great evil, the Refuge Woods had been the place for many of the major battles and most sentient creatures left it. So when the great evil was sealed and the dwarves of Du'gar returned, its king was quick to claim the forest as part of his lands. In doing so he built several walls and outposts to watch over those who came back to live there as well as those who used the roads through the forest. Those who wished refuge from curses in the forest were forced to pay taxes to dwarves, even if they just passed through the forest. Several protests were made by the Holy Order of Druids, but Garhun Crystalgut II ignored them and to most people's surprise the druids did nothing to back up their protests.