There's a bounty contract on an outlaw named Cinduin, and talking to Palagrius about orders will see him ask you to claim that bounty. The offending Wood Elf was last seen near Archad, a small village in the Dasek Marsh. You can get here via boat from Anvil (speak to Saquerilla on the dock just southwest of the guildhall), or else go on foot, following the north bank of the Strid River inland until you happen upon the settlement.
Once in Archad, any village resident can point you to Cinduin's lair - to the east of the village, on the riverside. The Wood Elf leads a purely Bosmer band, but only his death is necessary to complete Palagrius' orders. Once he is dead (he can be found in the tent in his camp) return to Palagrius for payment.