I personally found it in one of the pools down by the beach/dock. Just remember that your focus really needs to be off (I think my character's was about a third into the red) for you to fail and then encounter it.
the spot you fish doesnt matter. but like the quest info says your focus needs to be very low.
so get into fights, get injured, eat gruel, dont do your responceabilities.. whatever will drop your green/red bar down into the red.
but be careful, because that will also cause quest preformance to start dropping real fast --- Pokemon Black : Angel 1248-7913-2978 I cannot be caged. I cannot be controlled. Understand this as you die, ever pathetic, ever fools-Jon Irenicus BG2