You must zone after completing As Thick as Thieves to start this quest (logging out/in doesn't satisfy the zoning requirement, nor does warping to another Windurst Woods homepoint - warping to another zone and back of course will).
At this point you must run around Garlaige Citadel and examine a number of ??? spots. Each ??? directs you to another until you reach the final destination.
After you have started using the bomb incense on the holes, if you leave the area in any way, be it teleporting, zoning, tractoring, any way, quest progress is lost and you must start from the first ??? again. This is why it is imperative to be able to proceed through the Banishing Gate #1. Note that losing connection/logging out of the game does not change one's area.
Since your goal is to smoke a bomb out of the ceiling, you may need to move your camera view so that it is pointing upwards in order to target the ???s. Here are maps of Garlaige and the numbered locations of the ???'s you need to examine: Map 1 and Map 2.
Once you enter Garlaige Citadel, head to the southeast corner near the Banishing Gate #1.
Look around for a ??? at (I-9). Examine it and choose 'yes.'
Head west a bit and look around at (H-9) for another ???.
Go through the first Banishing Gate and follow the map down to (F-9). The ??? to the west of the intersection is the one you want.
Go across the hall to the east for another ??? at (F-9)/(G-9).
Go back the way you came, towards the Banishing Gate and examine the ??? at (G-8)/(G-9).
Head to the north of this area for another ??? at (G-7).
Head east to the ??? at (I-6) for the fight.
(NM did not spawn right away. Several attempts yielded nothing. Waited a little bit, killed a few monsters nearby, and finally the ??? spawned the NM.)
The last ??? you examine spawns the Bomb named Chandelier. When this monster is spawned, if it is not claimed before it attacks someone, it immediately Self-Destructs unless stunned. For example:
If it spawns and sees a player character before it is claimed, it Self-Destructs.
If it is spawned while a player is casting magic nearby, it Self-Destructs.
Thus if the claim attempt is made with magic, due to the range of detection, Chandelier will attack the caster before claim and Self-Destruct.
Ways to prevent this include:
Have the party back out of sight aggro range while the player spawning the NM approaches alone. When the cutscene ends, the player should immediately run back to the party. There is plenty of time after the end of the cutscene before the NM actually appears. From here it is simple to aggravate it with a ranged attack or other non-magic distance method.
Have non-magic claim methods (i.e. Provoke, Steal, Chi Blast) ready to use the instant the bomb spawns so that it can be claimed before it attacks anyone.
If the bomb tries to Self-Destruct, simply have someone Stun it.