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It is most definitely bugged. I've tried destroying the bow, abandoning and retaking the quest, talking and not talking to the dark elf with the exploding arrows, not equipping the bow until the contest starts and doing so before, paying the dark elf and just persuading her. Yyyyeah.... Nothing works.
The bugged quest is quite bugged, and beginning to bug me.
Same here as of yesterday. Tried abandoning and with and without exploding arrows. Rabbits killed with the hunting bow don't count in the quest tracker.
I mean, I think I've tried it with exploding arrows. I can't figure out how to use them. Is there something in my inventory I'm supposed to equip or is it the normal firing mechanism of the hunting bow after I talk to the dark elf?
Your get fire arrows automatically after buying or persuading the dark elf. That part is however also broken. Perhaps they changed the id of the hunting bow and hence it's not beeing recognized
My first guess would be that something went screwy when they made the heavy attack changes to bows, possibly. I'm really not sure.
Whatever the cause, it would be nice to get it fixed, or at least get some sort of indication that "Hey, we're looking into it." Having quests in the game that are impossible to complete is just frustrating.