The Preserved Red Iris Flower is located in a chest at the southern end of the explorable area Barbarous Shore in Nightfall. Only one Preserved Red Iris Flower is dropped each spawn, regardless of the size of the party. This item is obviously reminiscent of the Red Iris Flowers one can collect in pre-Searing Ascalon in the Prophecies campaign to give to Gwen. Presenting the Preserved Red Iris Flower to Gwen (GW:EN) in the Hall of Monuments will unlock the quest Fire and Pain.