Enemies

Periodically, Arco will stop whatever he is doing and state the presence of an enemy that must be dealt with without delay. Anywhere from 1 to 3 enemies may be present, and a purple marker will appear pointing to each one. Arco must attack the enemies using empty hands, an ax, a hammer, or a spell via his magic staff. The enemies will attack Arco back, and in the even that Arco loses all of his health, will steal some random items from his inventory. When an enemy is successfully slayed it will drop loot, which varies based on the enemy type and (in some cases) current active quests

At many points throughout the game, the enemies that may spawn on Deiland are determined by quests that Arco currently has active; however in the event that no quests that impact enemy spawning are active, the possible enemy spawns are determined by Arco's level (and in some cases, the time of day)

While on Ankora, enemies are always present, and can generally be ignored by walking away if so desired.

Quests' Influence on Enemy Types
Essentially, a list of possible enemies is populated based on Arco's active quests, and then a type is chose from that list at random. A particular enemy type may be on the list any number of times, and in fact some quests add an enemy type to the list multiple times. Because any combination of quests could be active at any given time, it is likely impossible to determine the % chance of a given enemy spawning.