The Quest: Bring Dragon Bones and a rope. You need to go outside of Yanille on the north-western side of the town. There you will see a checker board building with handholds on the outside. Climb the handholds, go up the ladder, and talk to the Watchtower Wizard. He will tell you to look for evidence of the theft. Go down two sets of ladders, and go outside of the building. There is a candle in the room. Outside the building are several bushes, search them all until you find an eyepatch, some fingernails, a dagger, a robe, and some armour.