The book is fantasy/sword and sorcery. The overall plot ends up being a group from different races (dwarfs, gnomes, elves & humans) banding together to defeat an evil (dragon, I think) that has been raised by a band of gnome elders. There are several subplots. A young gnome girl is banished from the gnome tunnels, and it turns out she is the descendant of a powerful gnome witch/wise woman. She has been warned about wolves in the world, so when she encounters a stray dog, she thinks it is a wolf and people she meets are too polite to correct her. Her parents follow after her hoping to fend off a war with the dwarfs. The mother is captured and tortured by the dwarfs and the father defeats an infamous wolf that has preyed upon travelers for years. In the city of the humans, a wizard has discovered a plant that makes people work like mad, and of course, ultimately will kill them. He is opposed by his prize student and a group of people who want to prevent him from becoming king.
Maybe it's something of Terry Brooks I've only read the original Shannara trilogy, but there are gnomes that don't get along very well with the rest of the races (including dwarves) so maybe your book is one of the later books.
In the city of the humans, a wizard has discovered a plant that makes people work like mad, and of course, ultimately will kill them. He is opposed by his prize student and a group of people who want to prevent him from becoming king.