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Overview
You should visit this area before you clean the Bandit Camp to the north, since it will be full of bandits and you'll be able to scalp them all! Arrows will fly all over the place, so it is usually an interesting place to be.
1 - Viconia
When you approach this spot, Viconia (NE, Drow Elf Female, Cleric) will run up to you and ask you to protect her because she is being chased by a Flaming Fist Mercenary. The mercenary will then show up and accuse her of murder. You can take either side in the dispute.
If you side with the mercenary, then Viconia will attack you, and you'll earn 100 xp when she dies. If you side with Viconia, then you'll have to kill the mercenary, which will earn you 250 xp and not cost you any Repuation. However, if you add Viconia to your party, then you'll lose two Reputation points.
2 - Palin or Ted
If you reach this spot before Chapter 3 then you'll meet Palin here. Otherwise you'll meet Ted. If you tell the one you meet that you're adventurers, and that you enjoyed his story, then he'll recommend the
Firewine Bridge as a good place to "get rich."
Note: Palin and Ted are a reference to Terry Gilliam's film
Jabberwocky, which starred Michael Palin.
3 - Raiken
You'll meet the bandit lieutenant Raiken here. If you tell him that you want to join him because it's "bloodthirsty" work, then he'll escort you to the
Bandit Camp, and you'll earn 400 xp. If you tell him that you want to join him because he's "too good" at his job, then he'll still escort you to the
Bandit Camp -- just as prisoners instead of new recruits -- and you won't earn any xp.
Anything else you say to Raiken will cause him and his men to attack you. You'll earn 1105 xp total for the battle, and you'll find a
War Hammer +1 on Raiken's corpse.
Note: If you kill Raiken, then you'll still be able to infiltrate the
Bandit Camp by talking to Teven in
Larswood. But if you kill both, then you'll have to fight your way through the
Bandit Camp.