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You'll receive this quest from Unsinkable Sam in the King Crab Inn in
(#1). You'll need to have the Pet Pal talent to be able to talk to him.
During your conversation with Sam, he'll tell you that he loves Maxine, the mayor's cat, but that for some reason she always rebuffs his advances. You'll find Maxine in the main room of the town hall (#2). When you ask her about Sam, she'll reveal that she loves him as well, but that she has standards, and she can't have a relationship with an "alley cat." Learning this information will earn you 90 xp.
Back in the King Crab Inn, when you relay this news to Sam, he'll tell you that he used to have a bejeweled collar, but that he lost it when the ship he was on crashed into the rocks near the lighthouse in Cyseal West. He'll then speculate that wearing it would transform him into a "tom of means" in Maxine's eyes. However, he'll worry that a crab might have made off with it. At the end of the conversation, you'll earn another 90 xp.
Eventually, while you're exploring the
(#3), you'll encounter a giant spider-crab called a Source Nightmare. It will have three Sea Spiderlings with it. All of the creatures are water-based, so water attacks will heal them while fire attacks will cause them extra damage. Each turn the Nightmare will draw upon the water around it, and the more water it draws, the more damage it will do. The only way you can block the Nightmare from doing this is to have characters standing between it and the water.
When you kill the Nightmare, it will drop
, and you'll earn 840 xp when you pick it up. Then when you deliver the collar to Sam, you'll earn an additional 1400 xp, and Sam will rush off to the town hall (#2). When you follow him there, you'll witness the happy couple making plans to get married. After their conversation, you'll get a chance to have your main characters talk, and you'll get to choose between being Pragmatic (crafting +1) or Romantic (lucky charm +1). Then Sam and Maxine will head over to the King Crab Inn (#1), where they'll spend the rest of the game by the back staircase.
1 - King Crab Inn
2 - Town Hall
3 - Entrance to the Black Cove