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Background
You'll receive this task from Tealdor (#2) when you talk to him just outside mayor Renengild's house (#1) in
Stalwart Village.
Walkthrough
Tealdor will tell you that he spotted a thermal pearl in
Longwatch Falls, but that the area was too crowded with lagufaeth for him to get to it. So he'll ask you to retrieve it for him. He'll also recommend that you talk to Thyrsc (#3) before leaving. If you do, then Thyrsc will give you two Potions of Mirrored Image.
In
Longwatch Falls, you should head to the hot springs, which are located in the northwestern part of the map (#4). There you'll encounter lots of lagufaeth, including a lagufaeth broodmother. Most of the lagufaeth should be straightforward to kill, but the broodmother can be tough, so when you get to her, we'd recommend killing all of her helpers first and then ganging up on her.
With the hot springs clear of enemies, you'll be able to search them for the pearl. You discover three pools that you can look into. You'll find a
Pearlescent Orb in the third one. However, when try to leave
Longwatch Falls, you'll feel something move in your backpack, and when you look inside, you'll realize that the orb was really an egg, and that it has hatched. This will earn you a
Baby Lagufaeth pet.
When you return to Tealdor, he won't seem dismayed that his discovery was an egg instead of a pearl, and he'll even offer to pay you 500 cp for the
Baby Lagufaeth. You can accept this deal or not, and the quest will come to an end either way.
1 - Renengild's House
2 - Tealdor
3 - Thyrsc's House
4 - Hot Springs