This is a Defiant quest is Scarlet Gorge which requires you to spy on Nathur Kull using a disguise. I remember this one from Beta and had no problems.
I took this a couple of days ago and stumbled on Nathur, before I put the disguise on. He attacked and fell through the floor. My pet had aggro, but I couldn't get a LOS on him until my pet died. I then took him down. After waiting for him to respawn, I donned the disguise, only to find it would activate only for a second and disappear.
I tried a few times. Canceled the quest and re-did it with the same result. The disguise would simply pop on and then disappear. I did file a bug report. And have tried it a couple of times since - no Luck.
Any thoughts - I searched here, but found nothing and have seen others complete the quest while standing there watching.