May or may not be a known issue, but no mention of it on the UESP wiki, so minimally "rare"
Quest progressed along pretty much as it should have until I got to the house where the hostages were being held. As soon as I came through the front door, the hostages headed out through the front door. Quest marker still showed that they were in the basement so I hung around for a bit under the idea that they were behaving somewhat like respawning side-objectives in some of the dailies. Nope. It took exiting the game, relaunching and logging in again to get them to appear as they should have (bound and in the basement) and progress the mission from there. Once that was taken care of, the rest of the mission and its side-mission worked as they should have.
I'm fresh out of outrage, but I could muster up some amused annoyance if required.