Saint Louis Park
Rulebook Page 14 wrote:
Characters committed to a quest are considered
committed to that quest through the end of the quest
phase, unless removed from the quest by a card effect.
While Thalin is committed to a quest, deal 1 damage to each enemy as it is revealed by the encounter deck.
Thalin is still questing at this point in the example that you gave. If you finish a quest later via Legolas or a similar effect, then no, Thalin is not still questing.