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When you talk to Sheogorath, he mentions a certain Little Tim, could this be a reference to Tiny Tim (R.I.P), because for some reason, whenever I hear Tiny Tim's songs, the first person to come to my mind is Sheogorath...

He's probably talking about the character from A Christmas Carol. It might be a reference to the singer, though. His name was also a reference to the Dickens character.