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yes it exists. I did this quest also. (remember the damn mush mellows lmao)
but yeah, the npc is not in a hard place...they're inside the town. it's either the cleric guy in the camp, or the silver haired archer next to him. I can't remember their names now but it's one or the other.
The only reason I can imagine as to why you can't find them is maybe they got mysteriously erased with a recent patch? They really aren't hard to find.
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