By Design.

Here is a history lesson in case you are interested.

Back in my day, you could not discard any quest items. The reasoning was to make sure players never found themselves experiencing your current issue. HOWEVER, players would frequently skip around while questing (never could comprehend how someone wasn't compelled to 100% their quests) and find themselves at max level with dozens of quest items from quests they never completed. Guess what happened next. Players would contact us saying they have a quest item they want removed from their inventory.

So our Customer Service team starting making a list of all the items they had to remove from players inventories each week. And they would send this list to the EME TERA producer each week and say that players needed to be able to discard them. This is often referred to as a quality of life issue.

So we talked about it. How could we make this experience better for the player? We decided it was the better of two evils to allow players to discard their quest items as long as there was a confirmation pop up telling the player it was a quest item and that discarding it would block further quest progression.

That change has drastically reduced the number of related contacts. Yes, occasionally there are players that end up in your situation. That's why I said we chose the "better of two evils."