This item is the flute that Gwen had before you purchased her the new one in pre-searing. It is the same flute as the Broken Flute in pre-searing. It is found after the Searing in Old Ascalon near Sardelac Sanitarium.
Having Gwen's Broken Flute with you when you talk to Gwen in the Hall of Monuments will gain the quest Fire and Pain but only after you have completed The Missing Vanguard.
- You can equip Gwen with "Gwen's Broken Flute;" however, it does not appear to evoke a response.