This quest can be acquired from Miller Peshek at the Rattay Mill. Once you have spoken to Peshek, the first thing you will need to do is find a spade. If you have not already done so, pick up the spade from the cart at the mill.
The key to success in this quest is stealth. You will therefore benefit from using an alternative outfit with low noise and vis/conspic ratings. If you cannot afford such an outfit, you will do just fine by unequipping any armour with these ratings. If necessary, you can do the quest completely naked.
Once you are ready head over to Gallows Hill, the executioner's block, as marked on the map. Dig up the grave and loot the body. When Henry notes that the ring is not there, go back to speak with Peshek. You must now search the executioner's house for the missing ring.
Before heading to the executioner's house you should visit the Apothecary in Rattay and purchase or craft an Aesop potion. This will allow you to move throughout the grounds without having the dogs bark at you for 10 minutes.
The easiest way to infiltrate the house is by going in at night when the executioner is asleep. It can also be done during the day if you time it right by paying attention to the movements of the executioner and taking advantage of the moments when he is away from the front door.
Take the key and bring it back to Miller Peshek. After thanking you for completing the task, he will inform you that he is the sort of man who will buy stolen goods if you should have any. Take the ring to Miller Kohelnitz north east of the Rattay Mill to complete the quest.