Save the elf and defeat the bandit scum.
You'll find this short quest to the west of Codger's Quarry. Look for smoke in the air.
Nearby you'll come across a cottage on fire, surrounded by a group of bandits. These guys are up to no good.
You can either defeat them now on your own, or break the door down and free the elf inside, who will help you in battle using his bow. Once the bandits are dead, talk to the elf, who tells you about a tree stump nearby.
Go around the back of the building to find a tree stump with some loot in it. Job done!