Okay, so just chatted with the dev team. They are aware of the issue from another bug report and are working on a fix for this. However in the meantime, to get past this issue, you will need to drop the quest, start it again and go through it again without being grouped. We had a few devs test this and they were able to continue the investigation.
Hi All, we believe we have a fix for this issue. Please see below:
If you are receiving a "checking invalid game files" error when you try to launch ESO, you may have files like "screenshots" saved under your Game Client Directory. (These will be detected as invalid.)
Some addons may save your ESO screenshots in the game client folder, and this can result in the "checking invalid game files" error.
Please locate the folder where your screenshots are being saved and either delete them or save the screenshots folder on your desktop.
Your default ESO screenshot folder file path should look something like this:
C:\Users\\Documents\Elder Scrolls Online\live\Screenshots
This is where your screenshots should be saved to avoid the patcher detecting "invalid files" under your Game Client directory.