Try going outside of the Inn where the contact went. Sometimes I've found some bad guys that ran away in different places. Check around the outside of the inn. The quest might not be able to advance until you finish him off.
If not, hopefully you have a recent save you can go to. (Don't let him get away this time.)
[img]graemlins/dancing.gif[/img] [img]graemlins/dancing.gif[/img]