Location: Atusa's corpse
When you use Corpse Eater on it: Learn Fortify, and get some lore about about Atusa.
During dialog with Kniles the Flenser: Pacifies him. Fane can acquire the Face Ripper.
You can feed it to Buddy; it will make him upset.
Atusa's Leg, with Fane in the group, can be traded to Kniles the Flenser just upstairs from the Fort Joy prison (in the bloody area with the body parts, monks and caged flesh golems). In return, you are given the Face Ripper, Fane's quest item, and free pass to simply leave the fort.Alternatively, consuming the leg as an elf (or as Fane, disguised as an elf) grants you the Geomancy spell Fortify, and a bit of insight in Atusa's life.