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The Lair of the Werewolves
Go down the steps and you should find four werewolves. As you fight them, another four shadow werewolves should pop in and join the fight. Once again, there's not a trick to this. You just have to use crowd control attacks or abilities and pick them off one at a time.
There's a second group just past this. Once again, you'll face about six or eight werewolves and you'll just have to keep fighting. We're almost done though. Head down the steps and you'll meet the gatekeeper. Regardless of your plans, agree to be taken to their Lady of the Forest for a brief parlay. We now get to make our decision.
It seems that Zathrian is responsible for the centuries long course in the forest. The werewolves are just starting to go on the offensive now because they've gotten tired of waiting on him to cure it. We can now choose to help end the curse, take revenge on Zathrian and the tribe, or exterminate the werewolves. Note that you have to be fairly good at persuasion to convince the Lady of the Forest to lead an assault.
For the approval effects, Wynne likes it if you end the curse and Morrigan should like it if you kill the elves. Leliana will be quite upset if you try to kill the werewolves. Wynne will be upset if you try to kill the elves or the werewolves, although you can use persuasion to reduce the effects greatly. Sten holds no real opinion. It basically extends pretty naturally from there.
As for the material differences, the big difference is who you get for the final battle. If you kill the elves then the werewolves will join up with you. I don't know why you would want more melee fighters, but you can have them. If you kill the werewolves or end the curse, then you'll get some Dalish archers for the final battle.
You can loot a fair bit of stuff from Zathrian, although you can actually kill him in all three paths. If you kill the elves, then you can loot everyone in camp. The reverse is also true for killing the werewolves. If you cure the curse, you can get a shield from Swiftrunner.
*As an important note, if you're collecting the Scrolls of Banastor then you need to go back up to where the gatekeepers stopped you. There's a scroll in one of the side rooms. It's not fun to backtrack this far, so grab it when you can.
Now for the details.
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Kill the Dalish Elves
If you have at least three points in Coerce, then you should be able to fan the flames and convince the Lady of the Forest to lead a charge into the camp. Choosing this path will take you immediately to the camp. It's actually a pretty easy fight. Witherfang and Swiftrunner should help with Zathrian. You can also just surround him and attack. He may have a fair bit of health, but he's still just a mage. The worst he will probably do is cast cone of cold.
Once he's dead, you're basically done. Lanaya's the worst threat, since she's also a mage. She doesn't have much health though. A rogue or warrior rush will take her out. Varathrone was the only other one who seemed to be able to take a bit of damage. The rest of the hunters and unnamed elves fell easily. The werewolves are also very effective at taking out about half of the camp.
Once the last one dies, just wait a moment for the end conversation. You can get their loyalty and then loot the camp. After that, we're done.
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Kill the Werewolves
If you're going to do this, start by getting Zathrian. It will make it easier. You can take the shortcut behind her up to the entrance. Zathrian followed you, so you don't have far to go. Convince him to at least see them. You can then agree to attack the werewolves.
He should be able to keep Witherfang off of your back for most of the fight. You just have to watch out for his cone of cold spell though. He doesn't seem to appreciate the risk for friendly fire. You basically just have to cut through the normal werewolves around the lair. Some basic crowd control will do wonders. Once you've cleared things up a bit, Swiftrunner will be easy to kill.
You can then just run over and help Zathrian finish off Witherfang. Loot her body and check Swiftrunner for some extra loot.
We're not really done yet. When Zathrian talks to you, he should mention that Lanaya knows what to do with the heart. This means that you can kill him with no punishments. The good news is that he is also still wounded from whatever damage Witherfang did in the last fight. He will not heal. You can kill him pretty easily in this weakened state and then get some good loot and experience.
He will summon two greater shades and a few wild sylvans. These aren't too hard to kill though, as long as you have a way to heal up and take out the sylvans one at a time. You can take out the shades by surrounding them. Head on back to camp to report back to Lanaya.
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End the Curse
This is the “good" ending. When you get Zathrian, you'll learn that he will have to sacrifice himself to end the curse. He refuses to help the werewolves, so you'll need to convince him. You'll need to attack.
He will lock up all the werewolves with a stunning spell though. I wasn't able to cleanse the spell away, so you might end up on your own. He'll summon a few sylvans and two greater shades. Zathrian will then retreat to the entrance. You should be able to just rush him. He's still a mage, so he's vulnerable if you can get close. He also only knows ice magic. The worst he can do is cast cone of cold on your party. He can also cast blizzard apparently, but all that did was freeze his own allies which made the fight pretty easy.
Once Zathrian is wounded badly, he'll submit and end the curse. You can loot his body and then ask for a reward from the human form of Swiftrunner. There's no penalty to anything for asking and you'll get a nice shield.
Head back to camp to report back to Lanaya and get your confirmation of support.