I've been to the web searching for Walk-troughs on this game, seems that few are made yet.
I found this post searching for the same answer (thanks to the heads up here i managed to finish mine :P).
So, about the Location, i can say certainly that is the Mirkwood, as for the box were it is hidden, i don't really know if it is random, but in my case it was on the box at the left side of the Elf lad you have to save.
The reward in my case, was a box, such as those from any other side missions. In it you could choose one from four Elfish Stones...
About the crates, you're probably right johnnycigar, it would seem that a full random positioning system would improve the game replay-ability. Although i think that in this sector, the game looses many points. You can only re/visit the maps while before you have finished the last mission, when done, it all goes back to the stage 0 and all as if you wouldn't know any location in the map.