This is a tough quest if you aren't ready.  The respawn rate is pretty quick, so be careful if you have a tendancy to back up when fighting mobs.  If you are careful you can do this quest in the mid-30s, and groups in the low 30s could probably pull it off without too much trouble.  The whole chain is nice because it is so close to town, not a whole lot of running around to work through each step.

You can see the ship and small island if you look southeast from the end of the docks.