It's important you take the following into consideration:
1. You can actually lose points for doing the opposite suggested in this guide. You can also lose points if you attack these NPC's if the option is available, even after helping them. It's probably for the best if you save your progress at the start of each level or whenever your feel necessary.
2. You must have earned all the 16-17 points available before going to Mors-Sarmeth. You won't have the option to go back to other areas once you get to the entrance of the fortress.
3. If you are trying to unlock the Helpful achievement at the same time, all the related quests mentioned in this guide have the good ending.

Karma Point No. 1: Free Blotch.

Karma Point No. 2: Free Hannah Newmoon.

Karma Point No. 3: Give Saruss some food (make sure you have at least 1 Food).

Karma Point No. 4: Help Fawn.

Karma Point No. 5: Be honest with Charlie.

Karma Point No. 6: Play along when talking to Bertie (you will need at least 3 points in intelligence)

Karma Point No. 7: Help Dandy

Karma Point No. 8: Find a new master for Arabella (plenty of options).

Karma Point No. 9-10: Help Sherman. You have the option to find and return the alms money for 1 karma point or donate it from your own pocket (200 gold) for 2 karma points. If you pick up the money, you won't have the option to donate anymore.
If you want to avoid picking the alms money by mistake, avoid this location and talk to Sherman twice instead.
Thanks to Den1sArt for finding the last karma point missing.



And this is dialogue option available if you picked the alms money.

Karma Point No. 11: Free Doler of Nomon.

Karma Point No. 12: Give Bird its old home back.

Karma Point No. 13: Put the Night Knight back together.

Karma Point No. 14: Help Anne and William.

Karma Point No. 15: Help Fred the Piper.

Karma Point No. 16: Give the diamond to Seria (you can borrow it if you still need it. You will have the option to return the diamond when you are done with it).

Karma Point No. 17: Give Leo his brother's letter.


Make sure you have earned all 16 or 17 Karma points before you go to Mors-Sarmeth!

Karma Point No. 18: Free Jumbo Bee.

Karma Point No. 19: Free Ben.

Karma Point No. 20: Give Sarah half the potion.

Karma Point No. 21: Do not sacrifice any of your friends!

Decided not to give a long explanation on how to get all the points, but if you think that is necessary to extend any hint just let me know. In case you missed some, you can always do a second playthrough or if you are planning to unlocking the Guardian achievement karma points give a nice boost, specially when you combine them with some skills.

This was my first guide and English is not my first language. So, I'm open to improvements and suggestions.