Recalling what you know of the town and it's history, it was once under the protection of the Empire, like all surrounding lands. There was a keep built further to the north of this settlement, where a large contingent of the Iron Legion were traditionally stationed. After the onset of the war, a majority of the legion was called away. In their absence their absence the Oni infiltrated the keep somehow, and you remember a story about the Mad Butcher of Shadowseal Keep, but the details escape you.
As you mingle with the few villagers around, you detect a definite air of unease, something has these people on edge. With a couple well placed questions you learn that not only have the kobolds been causing trouble, but villagers have been dissappearing, sometimes from within their own homes after the gates have closed. The villagers worry that the Oni have gained a foothold, and established a cabal within the confines of the town itself. However the lord of the town is quick to dismiss any such notions.