The key opens Mad Mage Quest reward room. Talk to A Prisoner in Mintwallin prison tower. He will give it to you if you know the answer to The Riddle and in exchange for some apples. You will need Key 3620 to get to him. Click Here to Show/Hide Spoiler Information
Spoiler warning:Quest and/or game spoiling details follow.
Say: 'hi', 'pd-d-ks-p-pd', then 'yes' several times.
You will need 7 apples to make the trade.