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I took a quest from the Mages Guild and they told me to track down an escaped atronach. Normally the Atronach Hunting quest is supposed to take place in a dungeon. However, this particular time, it said the atronach was hiding in a city, specifically the city of Daggerfall. I had gotten the quest from the Daggerfall Mages Guild as well.

What am I supposed to do when this happens? I don't assume they want me to start kicking down random residential doors searching for the atronach. Is this a bug, and is there a way to resolve it? Or should I just reload my last save the next time this happens?

I don't think I ever encountered this kind of mix-up, but it's very plausible to suppose that this is an error. Just re-load your save and take a different quest, or fail it if there's no other way (at some reputation loss, sadly).

I've also gotten similar glitches on a semi-regular basis, such as where the quest target spawns outside the accessible areas of a dungeon. For example, in a recent Mages Guild quest, I was asked to retrieve wrappings from a mummy. I was lvl 8, so I didn't expect the dungeon to be that complicated, but I could not for the life of me find the right mummy. I did kill one, but it wasn't the right one. I got frustrated and used the Daggerfall Quest Locator utility, and it said that the only mummy was several million map units away from my location.

I'm not sure what the cause of this is, but I did install the 213 patch, as well as Daggerfall QFIX, Daggerfall Fix QS, and Hackfall. Those are the unofficial quest patches that are supposed to fix issues like this, not cause them. I'm pretty sure I got the install order right. But now if I want to remove them, I'm going to have to do a fresh install.