The Blight Orphans dislike a woman named Melisse and have suggested that a scarecrow with a knife in front of her house might scare her.
The kitchen knife is in the kitchen of the Crown and Lion Inn on a table. Next you need to find a scarecrow. After exiting the inn, turn right and head towards the entrance of the city. You will find a scarecrow in one of the fields. After getting the scarecrow, head back into the city. Just past Constable Aidan, turn right and the house right in front of you is Melisse's. Place the scarecrow on the spot marked "Soft Ground".
Oghren approves (+1)
Justice disapproves (-1)
Sigrun disapproves (-1)
Nathaniel disapproves (-1) , prior to patch 1.04
Anders approves (+1)
It is possible for your companions that are not currently in your party to experience the +1 or -1 approval rating. For PC V1.5, Anders did not receive a +1 approval rating (even though he was at maximum approval), and Nathaniel did not lose -1 approval rating (he was NOT in the current party). For PC V1.5, tried the opposite above (Nathaniel was in the current party, but Anders was not) and still no approval ratings from either characters (even though both were not at maximum approval).