Rosella entered their home while the dwarves were in the mine during her adventures. She cleaned the place, so when the dwarves returned they gratefully served her a bowl of the soup they were dining on. After they departed, she discovered they had left a Pouch of Diamonds behind. When she attempted to return the diamonds to the dwarves, they refused to accept them and gave her a lantern as a reward for her honesty.
The Seven Dwarves are characters that appeared in King's Quest IV: The Perils of Rosella.