Here is the funny part about this quest. There is a mistake since X years and idk why its still not fixed. I guess that no one posted it here. There are 2 moneybags from bandits that are named "Nigels pouch". Both spawn during the quest but only 1 counts to it. The first one is in cave with Faarhart bandits (left from the east gate - that one doesnt count). The second one is in a cave with 3 bandits with "water mage teleport to the cemetery". That one counts to the quest so you should check that cave. In G2A there was an orc.
Im not sure if it happens always.
If you used a different dialouge option (made it wrong and blocking a vendor for example that you want more money for helping him) then you just pay the money to Asmal without killing bandits or kill Nigel.
And you are right about the block part. That you can obtain the pouch after 3 days from him and can't complete the quest without killing those bandits.
Either way I think that the quest should be checked or at least change log entries to not confuse the player.