Try it this way... It checks the faction first, then the item handin. Do you have other NPC's that return items? If not, check that your plugins are in the right place.
Code:
sub EVENT_ITEM {
if ($faction <5){
if (plugin::check_handin(\%itemcount, 55561 => 4)) {
quest::summonitem(29400); # Honorable reward
quest::say("Thankyou you have saved felwithe from death and destruction!");
quest::exp(100000);
}
else {
quest::emote("will not accept this item.");
plugin::return_items(\%itemcount);
return;
}
}
else {
quest::emote("You are not yet worthy of this quest!!!");
plugin::return_items(\%itemcount);
return;
}
}