1. I think you have to have a ruck with the bandit leaders to find out where to go next. They're in the big tent with the veranda.
2.You don't have to kill them all - for the reasons above - but its worth more cash and XP if you do (and its a public service you get a bounty for).
3. No, I don't think so, and I don't think anybody's ever said otherwise AFAIK.

Bandit Camp Summary:

Option 1: Once you get the Camp on your Map, go there and start whackin' bad guys. Everyone there will be hostile to you, no matter what you do. There will be two bosses outside, one of whom is rather difficult.

Option 2: Be sneaky and infiltrate the Bandits. Only one person will be hostile to you--he wishes to test your strength to see if you're fit to join. If you do enough damage to him, he will approve of your mettle and leave. Everybody mentioned in Option 1 will still be there.

No matter which option you took, the 4 bosses in the main tent will be neutral, until you finish your conversation with one of them, at which they all go hostile and attack. Chapter 4 is started by taking the documents from the chest. If you did not get into any fights outside, all the Bandits outside the main tent will still be neutral.

If you went to the Bandit Camp, left, and returned much later, the enemies that you did not kill will still be there.

(Special Note: It is possible to do the Bandit Camp and begin Chapter 4 without turning anybody hostile, except the guy who tests your mettle in Option 2.)

[ 09-12-2002, 07:38 PM: Message edited by: SixOfSpades ]