A Costly Mistake Walkthrough
Start Location: On the tip of the small peninsula directly west of the ‘Hangman’s Alley’ fast travel marker to the west of Blackbough.
When you reach the location, you’ll find it guarded by a pair of Drowners. Kill both of them before using Geralt’s Witcher Sense to find a dead body propped up on a rock in the sand by the water’s edge. Loot the fellow’s body here for a Smuggler’s Notes – this will activate the side-quest ‘A Costly Mistake’.
Read the Smuggler’s Notes in the Key Items section of the inventory. This will update the objectives.
Enter the water and swim out to the search area in the distance. Fortunately, this relates to the closest wrecked boat to our position. Dive underwater and use your crossbow to dispatch any Drowners swimming around in close proximity to the target shipwreck.
When you are clear, dive down to the seabed at the rear of the shipwreck and use Witcher Sense to locate the target chest. Loot this for a sexy new Steel Sword – Maugrim, some cash and some other goodies.
This will also end the side-quest.