-This quest is impossible to complete on its own. You can only bring 9 companions to face 30+ troops. Using the highest tier archers possible and placing them on the side of a cliff so the enemy would have a tough time reaching them while being rained down by archer fire, they still all died...
Are you sure they weren't just wounded soldiers from a previous battle she had? If that's the case it makes sense you can take all of them as prisoners.
I didn't consider this a possibility. Regardless, I've noticed a lot of lords travelling around with minimal parties, but it looks like they may have fixed this in the recent patch.
I had a fight with Queen Rhagaea, party of 5. After defeating and taking her prisoner, I was able to take approximately 70 additional Empire troops as prisoners; they were not in the battle.
My clues: Not bald, has a beard, no markings.
None of the contenders matched this description. The perpetrator ended up being bald as he was the last one I tried killing without failing the quest.
Additionally, sometimes the contenders don't appear on the map at all and it needs to be reloaded.