It is similar to The Endrega Contract quest, meaning that you can start it by accessing the board near the scaffold in Flotsam, and you can finish it while searching for Malena, in forests south of Flotsam.
The main difference between these two quests is that you need a special item if you want to finish The Nekker Contract.
Witcher 2 Assassins of Kings Enhanced Edition Walkthrough: The Nekker Contract Side Quest Description
“In spite of events, Geralt had not forgotten his profession. Witchering was his prime source of income, so when he learned that the Flotsam authorities had posted a bounty for exterminating nekkers he accepted the job immediately. Before he began, he decided to learn more about the vicious creatures. He began looking for books about nekkers and searching for creatures to observe their behavior.”
When to start
During the exploration of the southern forest for Malena
Witcher 2 Assassins of Kings Enhanced Edition Walkthrough: The Nekker Contract Side Quest Walkthrough
When you start the side-quest called Malena, you will have to investigate a certain cave in the western side of Flotsam. This specific cave is filled with some nasty creatures, named Nekkers. A Nekker is a monster vulnerable to fire; however, Nekkers attack in groups and if they overwhelm you, there is a little chance to survive.
To defeat a Nekker you must keep a fair distance from the group and use fast attacks combined with fire attacks (Igni Sign).
After you kill several Nekkers in the cave below Flotsam, The Nekker Contract updates, and you will find out that the creatures use a subterranean system of tunnels to travel from one area to another. The goal of this side-quest is to find and destroy four Nekker tunnel entrances. These entrances can be destroyed by bombing them; however you need a special type of bomb, in order to succeed.
When you decide to travel south to continue this quest, make sure you pay a visit to Cedric, in the small village of Lobinden (east of Flotsam). Cedric sells Grapeshot bombs as well as the pattern used to create them. Buy 4 bombs or the pattern then go south.
Three Nekker tunnels can be found outside Flotsam, near the southern wall. You can find them faster if you pay close attention to your mini-map, because the Nekkers stay in groups, and these groups usually protect the tunnels.
The entrance to a tunnel is marked by blood and skulls, so you will be able to identify them if you look for red areas on the ground. Approach one tunnel and move the camera around until Geralt faces the tunnel. Press the corresponding button to destroy the entrance, and then look for another one.
One of the tunnels is located near the waterfall where you have to meet Malena. After all tunnels have been destroyed, look for Louis Merse in Flotsam and collect your reward.
Witcher 2 Assassins of Kings Enhanced Edition Walkthrough: The Nekker Contract Side Quest Images
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The Witcher 2: Assassins of Kings - The Nekker Contract quest guide