The location is random, and the "Suspicious Object" moves to a different spot after someone picks it up, but we may as well keep track of the places where we found one "Suspicious Object". I just waited at a spot and clicked it when it appeared, saves you some walking around.
(B-6) On the right side of the street.
(C-6) One the ground in front of the entrance to Count Caffaule's Manor.
(D-6) On the second floor balcony overlooking the street.
(D-6) On the street in front of the non-targetable door on the northern side.
(D-7) At the top of the stairs heading north. (I found it D-8)
Orcish spies have infiltrated San d'Oria and planted instruments of mass destruction and/or mayhem (IMDaoMs) in various discreet locations. You are to patrol the capital and remove any hazardous materials you encounter.