Surah 18:83. They ask thee concerning Zul-qarnain. Say, “I will rehearse to you something of his story.”
84. Verily We established his power on earth, and We gave him the ways and the means to all ends.
85. One (such) way he followed,
86. Until, when he reached the setting of the sun, he found it set in a spring of murky water: Near it he found a People: We said: “O Zul-qarnain! (thou hast authority,) either to punish them, or to treat them with kindness.”
83] Mereka akan bertanya kepadamu (Muhammad) tentang Zulkarnain. Katakanlah: “Aku akan bacakan kepadamu cerita tentangnya”.
 Sesungguhnya Kami telah memberi kekuasaan kepadanya di (muka) bumi, dan Kami telah memberikan kepadanya jalan (untuk mencapai) segala sesuatu,
 maka dia pun menempuh suatu jalan.
 Hingga apabila dia telah sampai ke tempat terbenam matahari, dia melihat matahari terbenam di dalam laut yang berlumpur hitam, dan dia mendapati di situ segolongan umat. Kami berkata: “Hai Zulkarnain, kamu boleh menyiksa atau boleh berbuat kebaikan terhadap mereka”.
Al-Baidawi, in his commentary, said, “The Jews asked Muhammad about Dhu al-Qarnain, and he said to them that God established him in the land so that he could reach the place where the sun sets. He found that it set in a muddy spring, and all around the spring were idolatrous people!
Al-Baidawi added that “Ibn Abbas heard Mu`awiya read “aynin hamiya” (hot spring), so he told him that it was hami’a (muddy). Therefore, Mu`awiya sent to Ka`b al-Ahbar, asking, “Where do you think the sun sets?” He said to him, “In water and mud.”
Therefore we have proof that the early Muslims who heard it direct from Muhammad understood this verse literally.
Muslims claim that the above story is intended to be a parable.
We can clearly see from the context that the story of Zul-qarnain is a literal one and not a parable. Muhammad was not saying this to illustrate a teaching but in response to a question about what happens to Zul-qarnain.
These verses are talking from Zul-Qarnain’s perspective of where the sun sets. In other words, Zul-Qarnain saw that the sun sets in a murky spring and not that the sun actually sets in a murky spring.
If you see the sun setting in a certain place, you would be gazing afar. You can’t be looking at something close by and see the sun setting on this place. Yet the verse is not talking about Zul-qarnain gazing afar. It says Zul-qarnain reached the place where the sun sets and found that it sets in a murky spring.
Yusuf Ali interprets it as a Western expedition terminated by murky waters.
To say that Zul-qarnain’s expedition was terminated by murky waters would immediately go against verse 84 which says “We established his power on earth, and We gave him the ways and the means to all ends.” The whole passage, right up to verse 86, emphasizes his power and success, not failure.
Even if you interpret “setting of the sun” as “western”, how do you interpret “it set in a spring of murky water” or “Near it he found a People”? What does the “it” refer to? Surely “it” refers to “the sun”.