At the risk of awakening a sleeping dog ...
The "Bag of Holding" that your workthrough refers to is NOT a TRUE Bag of Holding. It's a mutated form called the Jester's Bag of Holding. You can NOT store items in the Jester's Bag. Rather, the Jester's Bag will allow you to TAKE OUT one RANDOM item per day. These items will range from the totally useless (i.e a dead cat) to something good (Bottle of ELven Healing Wine).
Personally, I think its a cute item, but hardly something to fret over if you missed it.
BTW, CanadienVixen gave you the proper location for the item. It can be a bit hard to see due to shading ... so scan around for it. ALso, since it is NOT a quest critical item, there is a chance that it might have vanished if its been a while since you took care of the worg trainer.
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“Every tavern’s an opportunity, I say.”
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