A. To Hilltop West
B. Halfling Caravan
C. The Fortune-Teller's Caravan
D. Old Farm
F. Blake House
G. To Hilltop Foothills
The eastern section of Hilltop is a huge swath of land occupied by exactly two houses--and one of them is abandoned. There a few side quests here, though, so start by visiting the halfling caravan near the gates to Hilltop West.
The Halfling Caravan
Speak to Katriana, who will tell you that the caravan's fortune-teller, Daschnaya, has had her cards stolen by kobolds. Ask Torias, "Does this caravan sell anything?" He will show you his black-market goods, which include some decent low-level magic items.
Quest: Not Playing With a Full Deck
Katriana will tell you to speak with Torias about the kobolds. Do so. He will inform you that they fled to the north. There's an abandoned farm through a small gate to the north. Go there, and enter the farmhouse. You'll see some tracks heading down to the cellar. In the cellar, you'll find a group of kobolds. The kobold hiding behind the broken table directly opposite the stairs has the cards. Kill the kobolds, grab the cards, and return to Katriana. She will give you a key to the fortune-teller's caravan. Enter the caravan and return the cards to Daschnaya. You can receive some gold or a free reading as your reward.
Just to the east of the gate to Hilltop West, you'll see a red-clad man on the road, the 10th-level wizard Szaren. Speak to him to learn about the red wizards of Thay, and to possibly help him set up an enclave in Hilltop.
Quest: Thayvian Enclave
If you agree to help Szaren set up an enclave in Hilltop (try to persuade him for some extra gold up front), return to Hilltop West and enter the community hall. Speak with Haniah. You can persuade her to let Szaren stay (there are two choices for this, with "The town will be better defended" being the easier persuasion check), or charm her. You can also threaten to kill the mayor if she does not comply, and then actually kill the mayor if your intimidation doesn't work. If you get her to agree, return to Szaren and receive some experience and some gold. He will then set up shop in Toman Bross' house. Note that you can also agree to make him leave. Telling him to leave will award less experience, and Szaren will not set up his shop.
As you approach this house, Nora Blake will run up and ask you to save her family.
Quest: Rescue My Family
Enter the Blake home and kill the kobold waiting in ambush. If you do it quickly, Adam Blake will survive. Head upstairs and speak to the kobold footpad in the nursery. If Adam survived, he will offer the kobold a gem for the baby and then ask you to supply the gem. Give him a cheap gem or snatch the baby when prompted. Bards can also play a song to distract the kobold. Note that if you attack the kobold before you have the baby, the baby will be killed. Return the baby to Adam or, if Adam is dead, take it outside to Nora. Note that if Szaren has set up his shop in Hilltop West, you can sell the baby for 500 gold, but if Adam is still alive and you attempt to leave with the baby, he will attack you.