This quest can be picked up two ways:
Unless you know where Vagn is, it's far easier to start with the notice as he doesn't show an exclamation point. Track him to the middle of town where he's a pretty simple man: he believes there's a dragon in the area and needs you to kill it and scoffs at trying to describe it. You can haggle or not with him, then he'll point you to two local boys that were recently killed but have yet to be buried so you can examine them for information.
Head over to the house in question to find the grieving mother, Karli, standing near the two bodies. Talk to her and she'll be annoyed at first, as apparently many others have just barged in to gape at the bodies, but once you explain to her why you're there, she'll let you examine them. You just need to look at one to note while there are claw and bite marks, there's no burns.
Now head out to the search area to examine the cow's body, then the blood on the nearby rocks and follow the trail until you find the dog's body. Geralt will deduce it's actually a forktail but you need bait to lure it out, gaining 25 . Go talk to the elder and he'll give you bait in the form of Mia, a sheep. Herd her to the forktail's nest (if having difficulties, you can use Axii, though this could lead to issues with keeping the sheep alive if you're aiming for that). Once close enough, the forktail appears.
After it's dead, loot it for the Forktail trophy and Dancer, then head back to Vagn to let him know it's dead. If you lie he'll give you the full reward (204 or whatever you haggled). However, if you tell him the truth he'll only pay half the amount (102 by default) claiming he could have killed the "forkytail" himself if that was the case. Either way you'll gain the full 350 , completing the quest.
- Geralt caught word that the villagers of Fyresdal had caught sight of a dragon. Though the witcher codex barred him from killing these noble and intelligent creatures, he decided to investigate the matter all the same.
- His investigation uncovered that what the Fyresdal residents had seen was not a dragon but a forktail - a beast that, while undoubtedly dangerous, has about as much in common with a dragon as do dragonflies. Geralt tracked down the monster's nest (which it had made in an abandoned siege tower), but the forktail itself was nowhere to be found. Geralt decided that, rather than wait for the beast to return, he would lure it back home using bait.
- The village elder honored Geralt that day with the gift of a lamb - though the animal he gave was certainly not the choicest member of the flock. From what Geralt later told me, the poor creature looked like a furry water hag and had an even worse temperament.
- Geralt defeated the monster and returned to the village to collect his reward.
- If Geralt tells the truth:
- This turned out to be smaller than first offered - having learned that the beast was no dragon but a much less dangerous forktail, the village elder decided the witcher's honorarium should likewise be proportionately smaller. This was not the first time honesty had lightened the witcher's purse.
- If Geralt lies:
- Not wanting to take from the villagers their story about the dragon (which had already made them the envy of all the isles) Geralt decided to hide the true identity of the beast he had slain.
- Talk to the village elder of Fyesdal.
- Talk to the victims' mother.
- Examine the victims' bodies using your Witcher Senses.
- Use your Witcher Senses to follow the monster's tracks to the site of the attack.
- Follow the monster's tracks using your Witcher Senses.
- Talk to the village elder in Fyesdal about bait.
- Guide the sheep to the forktail's nest.
- Kill the forktail.
- Take a trophy from the forktail.
- Return to the elder in Fyresdal for your reward.
- You can save the sheep, but just make sure you don't use Axii, otherwise it will try to stay close during the fight and likely be killed. If you herd it normally it should run to a safe distance when the fight starts. You may have to use Aard to knock the forktail down when it appears to prevent from landing on the sheep.
- During the conversation with the village elder after Geralt discovered the nest, the conversation makes reference to Sheepbagger from Sword of Destiny.