I just turned in the key to that chest on my shaman a few days ago, so it works, for some classes anyways. I talked to the dwarf corpse, got his note, put it in bank and forgot about it for a while. Got a key a few days ago so i decided to turn it in. I got a pair of no drop chainmail leggings as the reward (destroyed them so i dont remember the name or stats).
edit: i noticed you said you got BOTH items returned from the chest, maybe that is your problem. You dont need to give the note to the chest, only the key, u just have to have spoken to the dwarf corpse/gotten his note before the chest will accept the key from you.