Upon first entering Malloc from the west, the building to the north is the inn, which is run by a common innkeeper.
Also in the Inn you can sometimes find Foxfire, who has the location of the Knowledge Brew recipe and the key to the Monastery of Madness.
Sitting at a table in the northeast corner is Mia, who is mourning her son who died in a shipwreck on the lake. She gives you a quest to find the silver ring she gave her son before he went out on the lake.
East of the inn is a training hall, which is run by Mrrr. Besides providing training, Mrrr will also give you a quest to kill some Goblins which have been raiding around Malloc. There are six bands of Goblins, which you can find in the woods between Malloc and the mountains to the west. Once you've killed them all Mrrr will give you a suit of Field Plate Armor as your reward.
South of Mrrr is another shop run by yet another Merry.