Arkton or Fire elemental ?
 

Which is more beneficial reward wise ? And is there a follow up quest or some implications?

Dunno, I didnt bother to try both, just killed arkton since he was listed and stronger and seemed more evil. It gave me an achievement and decent gold/xp.

if you kill Arkton you receive 3 runes and the exp you gain from either battle is almost the same for me beating Arkton gave me 78 more exp rather than killing the Elemental. so you should definitely KILL ARKTON save the Elemental -- don't know yet if it effects later progression because i am right at this point in the game