Do you think that the engineer in this story should have known something illegal was going on at Colonel Stark’s home? What clues might have led him to this conclusion?

In my opinion, the engineer's intial meeting with Mr. Stark alerted him to the fact that something was amiss if not illegal. Stark's demeamor and request for secrecy, as well as the engineer's first impression all hint that something isn't right.

"A feeling of repulsion, and of something akin to fear had begun to rise within me at the strange antics of this fleshless man. Even my dread of losing a client could not restrain me from showing my impatience.

"'We have judged it best that you should come late. It is to recompense you for any inconvenience that we are paying to you, a young and unknown man, a fee which would buy an opinion from the very heads of your profession."

A vague feeling of uneasiness began to steal over me. Who were these German people, and what were they doing living in this strange, out-of-the-way place? And where was the place?