I've installed the 1.04 patch and still cannot find the bandit lair. The quest was given to me by the Vagir King. He already had numerous castles/cities. I turned on the all-seeing map (Ctrl+T) and scoured the entire thing. Nowhere. There is no bandit camp. But here's something: just prior to my getting this "find the bandit lair" quest, I stumbled upon a bandit lair and cleaned it out. Soon after that I was given the bandit lair quest by King Whatshisname with the Vagirs. My guess is that by clearing the bandit lair immediately prior to getting the quest screwed me.
I wish the console would allow commands to push quests along, like you could in "Oblivion." There needs to be some sort of solution for this. I've had this same ongoing issue since before the first patch. None of the 4 patches have resolved the issue. I've started other games instead. But, damn, I had a great game going with the Vagirs. I was married and everything. Now the limit is almost up and I'm eventually going to lose face. It sucks.
Does anyone know if the Ctrl+T cheat actually reveals a bandit camp that hasn't actually been discovered? I figure that the lair spawns as you're looking for it, so revealing the map isn't good enough. But I'm freaking done with looking for a non-existent lair. I mean, really, doesn't that suck? To continue to look for something you know isn't going to show up? And there's no word from the developer either. I can only hope that I don't run into this same thing on one of the newer games I've started. Sure hate to let my Vagir Meister go... sniff...