This quest was given to my level 15 Troll Warrior and it was a major dud. The reason why I call it a dud is because the Kobold Protectors were all conning a very low blue to me, and when I dinged 16 in the dungeon they started conning green. Plus you need to kill copious amounts of green placeholders to get the Protectors to spawn. It was a long camp, probably three hours. The good side is that a lot of mobs spawn with weapons (and booze!) so the selling of loot can be quite the moneymaker. Make sure you enter the dungeon with LOTS of backpack space - the Kobold Hides do not stack and if you want to keep them (I destroyed them after looting them) you'll need enough slots. I made my camp in the location neofit described on this page - there are a LOT of spawn points there, but since everything was green there was little worry of aggro.

You have two rooms with a river floating through them. The southern one is for the exploration stage update. Then go to the Northern room, the one right next to the Paineel zone, and kill all the gnolls standing at the walls around the river. A protector can spawn in any of the spots.