I have my characters settle by rapids, as that provides easy access to water (no need to smash ice every day during winter).
Quests are generated as some kind of background activity, and so are not directly tied to your character, but the rate at which they're generated is limited, so I make a tour of the nearby villages about two weeks after finishing the previous quest.
There are sort of three kinds of quests:
- "Public" ones, where asking any villager about how things are will reveal if someone has such a quest in the village.
- "Hidden" quests, where you have to speak directly to the quest giver to get the quest, and nobody else will know about it, and so won't be able to direct you to the quest giver.
- "Active" quests, which are similar to hidden ones, but where the quest giver actively seeks your character out and may well speak first. These quests are typically to give the quest giver some equipment of above average quality to them (typically knives and arrows). Don't bring your masterworks knives with you when visiting villages, but bring a spare Fine one instead).
My quest tour goes to the nearest village, then the next one, etc. for a two day tour if I won't get any quest. On the next attempt I'll try to speak with more people in the villages to find a hidden quest, and on a third attempt I'll chase around every village to locate all the men (kids don't give quests, and women give one a single, rare one (with special conditions), which I think is public). I don't think the spirit standing messages have anything to do with quests, but I can be wrong.
Foreign traders often have quality equipment, but they're restricted in the range they carry, so they won't have some kinds of tools, for instance. Also, they only accept payment in furs.
A large cow of burden or a bull can be used to carry logs (but not tree trunks, at least not on cows), which can save of the hauling effort when building. Better tools allows for faster building, but it's possible to get by with just a standard quality hand axe.
The more you travel the more people you encounter, I'd assume. However, combat is brutal and risky, so selecting your fights when you can and retreat when the odds don't look good (before the fight: within it it's typically too late).