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Background
You'll receive this quest from Willis in
White Orchard (#1).
Walkthrough
When you talk to Willis, you'll learn that the locals recently burnt his smithy to the ground because they think he's working with the Nilfgaardians and profiting from their misery -- when really he doesn't have much of a choice other than to comply with their wishes. Willis will also mention that the fire started at night, but that he wasn't able to detect any clues to identify the arsonist.
To solve the crime, you'll need to head behind the smithy and use your witcher senses. You'll detect footprints on the ground, and you'll also learn some things about the arsonist, like that he's large and stinks of vodka. The footprints will take you to the river (#2), where the arsonist tried to hide his tracks by moving through the water. However, on the northern side of the bridge (#3) you'll see that arsonist was wounded by drowners. The drowners will then attack you, so be ready.
Past the river, the footprints will take you to a house in the village (#4) where you'll meet the guilty party -- Napp. He'll try to bribe you, so you'll have two options for the quest. If you accept Napp's money, then he'll get away with his crime, but if you bring Napp to Willis, then Willis will call for the Nilfgaardians, and they'll hang Napp. Either way, you'll earn 20 crowns and 50 xp for completing the quest, and Willis will start working as an armorer again.
1 - Willis
2 - River
3 - Drowner Attack
4 - House