Also known as Red Chalice after The Original Strife: Veteran Edition added the Blue Chalice to the game. The Red Chalice was found in MAP01: Sanctuary (Strife) behind glass and a force field which can be shutoff within the control room at the end of the map.
If playing on the The Original Strife: Veteran Edition, you have nothing to fear. Go ahead and follow this quest line. However if on the original edition of the game, this leads to a Dead End, where you will be killed over time and have to start over. It is recommended to ignore the the chalice all together in this case.