This post is for any people that want to know as I know I'm posting a year late.
But I just did this, today - It's easier than you might think. So first you just go in, give wine to that black guy in the blue robes and then he'll distract everyone, take the iron dagger on one of the tables before you slip away; now you may slip away with the elf man into the kitchen and then into the other room where the chest with your stuff would be - if you had any. Then go through the door, on the left there are two guards inside. SNEAK past the doorway into the room on the right and take the Light elven Armour, equip. equip the iron dagger you got from main room with a magic spell on the other hand, fire works well. If you have shouts, use unrelenting force or fire breath. then go into the room, kill the guards, take there equipment and so on. I did it this way as I didn't read what the elf man said. That's how you do it.
(Also: take any health related items you find, all the food in main party room is a good idea. fast healing works wonders if you can get into cover.)