Galfrid would have you investigate suspicious activity in the Twelveswood.
This quest is only available if you started the game in Gridania, and you have completed the quest Passing Muster.
Starting the Quest
Talk to Galfrid in the Central Shroud to begin the quest. There will be a cutscene.
Investigate Lifemend Stump
The next quest objective will be marked on your map and minimap. Go northeast and you will find a waterfall with a cliff on the west side that goes through a tunnel. Go north through the tunnel and you will see a Magicked Blade stuck in the Lifemend Stump. It has a glow around it, which means that there will be a battle sequence, also known as a Special Instance or instanced battle. Check on the Magicked Blade for more information. You can also read about it in the Active Help window. If you don't see an Active Help window, you can go to the System Menu and choose Active Help, and search for Special Instances.
Before entering the battle, you will be prompted to Proceed or Leave. You can choose Leave if you want to wait and prepare first. Otherwise, choose Proceed when you are ready to battle. Note that you can try again, and can optionally lower the difficulty, if you fail the battle.
Solo Duty: Chasing Shadows
After you click Proceed, there will be a cutscene. Two tattooed strangers will assist you in the battle. First, kill the Frenzied Oaks, then focus your attacks on the Frenzied Elm. Whenever Frenzied Bulbs and Frenzied Oaks appear, first kill the Bulbs, then the Oaks, before resuming your attacks on the Elm. After it dies, there will be another cutscene. This one is important, so if you've been skipping cutscenes so far, you might want to watch this one.
Pull the Sword from Lifemend Stump
After the cutscene, check on the Magicked Blade to take it.
Deliver the Sword to Galfrid
Go southwest to the green checkmark on the map to talk to Galfrid. You will be prompted to hand over the Magicked Blade. With a mouse, you can click and drag the blade from the Key Items tab of your inventory into the Item Request window, or you can right-click the blade in the Key Items window and choose Hand Over. After you have selected the blade, click the Hand Over button to hand them over. There will be a cutscene.
Next Main Scenario Quest
After completing the quest, you will need to be at least level 7 to proceed to the next quest. After you reach level 7, talk to Galfrid to accept the next quest: Eggs over Queasy.