So what happens if all of the goblin archers are killed before Splig has a chance to interrogate and find Frederick?  The quest guide does not state Splig has the ability to pick up the prisoners and take them back to the torture chamber.  So is this an automatic loss for the OL if all of the goblins are killed?

Just finished playing it (me as the OL) with that exact scenario (was able to interrogate one prisoner before the 3 heroes made it to the hall leading to the prison) and we decided it was OK for Splig to trek down to the torture room, pick up a prisoner as an action, take the prisoner back to the interrogation room, put down the prisoner as an action, and then attempt to interrogate.  It was essentially a moot point as the heroes more or less had the quest wrapped up.  I'll admit I didn't pick Shadow Dragons and opened the first door to unleash my slow-as-sin zombies on them, so poor playing on my part, but still a valid question.

Any thoughts?  Thanks.

Splig can also carry a prisoner (as per FAQ), but realistically speaking, turn 1 the Gobbos reach the Prison and are carrying the prisoners and by end of turn 2, have dropped off all the prisoners next to Splig.

Thanks for the clarification, I should probably print up the FAQ and keep it with the rules.  And thinking back to it, I think I left one goblin archer out for a 3 hero quest in the intial set up, and that's why I couldn't get all four prisoners out.  Man, I really screwed up that quest…lol!