Location: Qingmu Sect
Prerequisite: Complete Baidi Whirling Sword
Petitioner: Sima Ling
Petitioner: Sima Ling
Reward: Raining Needles manual
In order to trigger this side quest you first need to complete all of Shangguan Hong's side quests, up to and including Baidi Whirling Sword. Once you've done this you'll unlock her friendly rival, Sima Ling, as a potential party member - though first you need to do something for her.
Head to Qingmu Sect and speak to Ling. She's on the east side of the map, near her shifu and the other members of the sect. Ling was caught sneaking out, and she's being punished with a simple task: Collect some bamboo. In this case, however, she needs to collect Special Green Bamboo, whatever that means.
Either way, you're headed back to the Bamboo Sea that you visited during Shangguan Hong's quests, and Sima Ling joins the party to help. (Don't forget to allocate her Meridian Points.) As soon as you leave Qingmu Sect Ling will spirit you directly to the Bamboo Sea. The enemies here shouldn't pose too much of a problem if you've gotten this far into the game.
Travel along the upper path in the Bamboo Sea until you find a huge rock wall. You can walk behind the wall to find a hidden path to the northeast of the map. Here you'll find a Cottage. Inside the Cottage is a furnace. Check the furnace to receive a Refined Meridian Pill, a Refined Spirit Pill, a Two-Time Refined Essence Pill, and a Two-Time Refined Breath Pill. You can also check the jars near the furnace for Gancao, Dihuang, Tanxiang, and Ginseng, and by the bed for Residual Notes.
What a putz. Even if you came here with only Yi and Ling - which is very unlikely - Night Owl doesn't put up much of a fight. He uses hidden weapons, so close the distance to negate his range advantage and pummel him.
The quest ends once you defeat Night Owl, and Ling will run off. Follow her back to Qingmu Sect and you'll find another side quest waiting: Departure Test.