I like a lot of what has been suggested thus far. If I were investigating this, I would say that just because someone goes into hiding and asks for assistance from another, doesn't mean they have necessarily truthfully disclosed their reasons for going into hiding.
The priest could have told the sheriff only what he needed to know or what he thought would be sufficient reasons, but were either not truthful reasons, or perhaps not fully truthful reasons.
I'd also point this out. How far does the sheriff trust the reasons already given by the priest, and will he obstruct the party's investigation (fully or in part) or is he open, over the long run, to be persuaded by the party that all is not as it seems. In my opinion you should first establish the true situation versus the apparent situation, and decide how all involved NPCs will react as the progress of the investigation either confirms or contradicts the apparent situation. If you get my point, for this will definitely affect plot progress, as well as party-NPC interactions. Then again the situation can work in reverse. Is the sheriff as he appears?
But you mentioned the Paladin and religious motives.
To me when Paladins really shine in D&D there is involved in some way a scenario of defense of the innocent and or helpless (perhaps the priest is innocent of something of which he is sure to be accused or is weak, or helpless in some fashion), the active fighting of evil, and the Quest. (Previously I might have also said something about the Law, Capital L). You might though combine such scenarios.
With all of the above in mind I will suggest the following scenario.
There is a Wizard or Sorcerer who is an old nemesis of the Priest, and/or his god. This sorcerer has created an homunculus to spy upon and psychically torment the Priest. The homunculus, created from materials taken secretly from the priest's own body can act upon him sort of like a Voodoo doll. The homunculus can also enter the dreams of the priest to create visionary illusions and has convinced the priest that he has had sex with a Succubus and has impregnated her with a supposedly impure and unholy child.
The truth is that this is actually the case, because the Sorcerer has made a deal with the Succubus to help her conceive a sort of fallen demi-demon for her help corrupting the priest and his flock. The Sorcerer seeks revenge and to ruin the priest, the succubus seeks an offspring and someone she can physically and psychically feed upon, and they both seek to damage the worshippers and church of the priest, and maybe the entire community.
Both the Sorcerer and the Succubus have plans for the child and how they will use it to influence the local area and political and trade situation. Neither the sorcerer nor the succubus could have corrupted and seduced the priest by themselves, but the alliance between the two has nearly driven the priest mad and psychically and magically corrupted him. the constant attacks make the priest feel isolated from his god, nearly insane.
The priest decides to go into hiding in a secret location using his friend as cover. What the priest is unaware of however is that the homunculus is keeping him under observation at all times and the sheriff is really not his friend. The Sorcerer had previously murdered his friend (a sub-plot mystery) and the Succubus was able to assume his form and while placing him in hiding the Succubus is further able to feed off the priest. And with the help of the homunculus, seduce him whenever she wishes.
The Priest's god decides to visit the Paladin in a dream or vision and asks the Paladin to help find and rescue the priest. The god does not know the exact location of the priest because the homunculus, the Sorcerer and the Succubus have clouded his mind and cut him off psychically and spiritually from the god. But the god suspects what might be happening. And the Sorcerer's involvement.
So the god sends the Paladin on a Quest not just to investigate, but to help rescue his Priest. (Later on the god discovers about the Succubus and the Child. Which might lead to a new Quest. But how will the Paladin, and the god, feel about killing a babe, if the father is a priest and the mother is a succubus?)
In any case with this scenario, or one that might be something like it, you have religious motives, defense of the helpless (the priest), a Quest, perhaps defense of the innocent (it may be the intention of the mother to use the child for harm and evil, but the father being a priest, his nature and character might prevail in the child, indeed the priest or the Paladin might eventually adopt the kid and see if they can raise it "clean"), the safety of the flock and village, evils to fight - the Sorcerer, the Succubus, and the homunculus, and so forth and so on. You'd also have the background set of mysteries, depending on exactly how you want to structure the plot, as well as the built in moral dilemmas (always good for Paladin adventures).
In my opinion you could also use the homunculus to constantly psychically and magically attack the party in secret, the Succubus to assume various forms and maybe even attempt to seduce one or more party member (such as the Paladin), and the Sorcerer working in background to use magic and curses against the party.
If the party succeeds then the church might reward them, they might take the goods and hideout of the Sorcerer and if the Paladin rescues the Priest then the god might reward the Paladin for his service and Quest. Rewards might include something like a new Quest to receive a special Warmount, a Holy Avenger, a magical Icon or Relic, the granting of a divine familiar, a special Blessing given to no one else (so the Paladin is unique in all the world), the granting of a limited wish, or some special or new Divinely sanctioned ability that only the Paladin can use. (This gives him the ability to shine in the future while also making him unique and special.) Or it might be various rewards, and the god might even make the Paladin one of his champions, or put him under special protection so that the god becomes a future ally of the Paladin. Maybe advising him in the future through dreams, omens, and visions.
Those are some of my ideas anyways.
Well, I gotta hit the bed.
Good luck with it.