Dissension Amongst the Ranks... (#10776)

As stated, killing the NPC while disguised doesn't count toward quest completion.

Also, the tabard can be equipped while not in the correct area, and then tries to affect the player with the disguise spell and fails. If you then move into the correct area, it doesn't apply the disguise until you unequip and re-equip it.
Once you take the tabard off, you need to move out of the area to un-disguise, instead of having it remove the disguise spell as soon as you take the tabard off.