I’m confused here. The torch part should be normal quest progression where rather than returning Ivonda’s Memory to her right away, you instead go to trigger the torch. There should be no issue with this part. That being said, there was an issue with this quest in the past that was patched out (see the patch note on Mad Ramblings quest):
Or maybe I’m misunderstanding your post. Did you try this just now by GD Stashing in the quest item? If so, it’s possible that the torch interaction could fail if you don’t have the quest active.