"How Nasrudin Defeated the Nefarious Arronax" is a book - supposedly intended for children - describing the conflict between Nasrudin and Arronax. It also has some incorrect claims (to state them here would be a spoiler) which you can find more information about on the page about Nasrudin.
Troika clearly intended this as a satirical piece when adding it into Arcanum.
HOW NASRUDIN DEFEATED THE NEFARIOUS ARRONAX
and other stories
Gather around, dear children, and hear the tale of how Nasrudin defeated the nefarious Arronax, child of darkness!
Many years ago, before even the oldest of the elven folk alive today was borne to this world, Nasrudin the good ruled our fair Arcanum with kindness and the firm hand of justice.
But Arronax was of the darkness, and resented the rule of the light! Within his black heart he conspired to wrest control away from the virtuous Nasrudin and his holy Elven Council.
Nasrudin, in his goodness, and not knowing of Arronax's evilness, had bestowed a seat on the Elven Council to Arronax, and to repay this kindness, Arronax destroyed an entire city!
Nasrudin's heart was crushed. He condemned Arronax to the Void! But Arronax had twisted several of the council to his nefarious ways. And there was War!
This was a bitter war, my children, and if not for Nasrudin, Arronax would have destroyed us all! But, as it always does, goodness won the day, though a sad day it was, as the great Nasrudin lost his own life as he banished Arronax to the dark, eternal Void!
So, without the blessed Nasrudin guiding our way, we would all be enslaved by Evil! Remember this as you go to sleep, and know that Nasrudin watches over us all - but beware! Arronax may still be lying in wait for those who do not mind there elders and keep to their studies!