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The hermit (#1) will give you this quest when you ask him about witcher work. You'll find the hermit either in his hut or wandering around outside of it. The hermit's hut is the one past the barrows, not the first one you see.
The hermit will tell you that the nearby druids' circle (#2) has started attracting "dangerous entities," and he'll ask you to take care of it. That would be easy enough, except the King of the Wild Hunt has joined in, and "no mortal, not even you, can hope to defeat him." The hermit will then suggest that you burn
at the circle, since that will keep the King away. You can pick up some
from the barrows next to the hermit's hut.
When you approach the druids' circle at night, you'll find three wraiths there. After defeating them, a second wave of three wraiths will appear, and then once you've defeated them as well, a third wave of three wraiths will appear. Either during the second or the third wave, the King of the Wild Hunt will make his appearance, and that's when you should place the
in the lantern at the circle. If everything goes well, the King will back off from the fight and disappear, and you'll get about 7000 experience points for defeating the wraiths.
Note: We've heard people claim that they've killed the King of the Wild Hunt here, and that he drops a special alchemical ingredient called
Vapors of the Hunt
. However, there doesn't appear to be any way to use the ingredient, and so it's probably not worth the effort to get it.
When you return to the hermit after defeating the wraiths, he'll let you choose between three different rewards: your very own hut (the one next to the hermit's), the book
Vampires: Facts and Myths
, or a
Wreath of Immortelles
. The hut is basically worthless. You'll find a
inside of it, but you won't be able to store items there or even meditate there. The wreath can be used the in the quest
The Heat of the Day
. Besides the reward you choose, the hermit will also give you a
Pouch of Salt
and 5000 experience points.
1 - Hermit
2 - Druids' Circle