Try checking inside the shack outside the woods. And in a barrel (or some kinda container) that's also outside the woods next to the shack. There's a trigger for progression in both those instances.
I cannot click on the barrel next to the shack, I have confronted the hag, then went to the guard and chose to investigate then went and found the shovel, went into the shack and clicked on the fire, and then spoke with the suspicious guard and I missing something.
I'm really sorry, but it's been so long since I played that I don't remember how I completed the quest anymore. Maybe checking some forums on F95 would help?
