During your main quest you will be required to travel to Frostford. If your reputation is great you will encounter upon entering the hall.
The next time you explore Frostford's Outskirts will give some flavor dialogue and upon returning to the Clearing, Zoe will engage in diplomacy with the Dryad. She'll ask you to retrieve her bag and some ingredients, which amounts to 500 food, 15 nature essences and 5 fluid substances. NOTE: This requires food storage upgrades and like most collection quests in the game, the essences must be in your main storage and will not be counted in your backpack.
Upon returning to the clearing with the supplies, Zoe will leave to do some research and you will be set upon by 10-15 mercenaries. Even in defeat, one of them manages to fire a large poisoned/cursed crossbow bolt at the Dryad, however Zoe will dive and take the bolt instead, saving the Dryad but dooming herself.
However, all hope is not lost, the Dryad will describe a process where she can save Zoe but the process requires a massive amount of life energy, in the form of a sacrifice of one of your party members. You must choose between sacrificing your party member, yourself or letting Zoe die.
Apparently, when choosing a party member, Zoe has a chance to survive but not your teammate (no matter the Slaves stats) while the main character always survives and save Zoe.
Return to Frostford to find that the town will survive and so will the Dryad but Theron "punishes" Zoe by exiling her from the village. At this point you may welcome her into your home and gain a cute new wolf-girl with the "Mentor" trait.
Mysterious book side quest
After obtaining Zoe, if you go back to the cave north of Ambergaurd and obtain a second Mysterious book, shortly afterwards Zoe will come to you saying that she would like to have a look at it. Let her and a few days later she will ask for some items (some essences and 10 teleportation seals).
When you give them to her, it will start a sex cutscene involving a tentacled monster. It will give you the option to 'save Zoe' or 'hold back and wait'.
If you choose the 'save Zoe' option, it will end the scene prematurely, and increases her loyalty.
If you choose the 'hold back and wait' option the tentacles rape Zoe and the scene is extended. Zoe will be considerably stressed and lower obedience and loyalty.
Either way you will learn the 'Summon Tentacles' spell after the scene, which can be used as a form of punishment for slaves and will increase fear and obedience at the cost of stress and loyalty (Zoe's reaction to this spell being used on her is unique).
Neither Zoe nor this scene seem to be accessible via the character gallery, so it is advisable to make a save before giving her the items.