Speak with Major Mills at the docks in Theramore.
Yes, Tethyr is certainly real, and he lives in the waters off Theramore.
Has a thing for bright lights. He's the reason they shut down the lighthouse in the first place, you know...
And if you light it up again, he'll come right back. But no one in their right mind would do that.
So that must be your plan! It's been good sharing a drink with you, but don't blame ol' Nat if Tethyr REALLY turns you into fish bait. If you're going to do this, make sure you consult Major Mills at the Theramore docks.