"I have found a place with two wagons (not train wagons)where the flag is placed."

The wagons are in a walled off section with a couple breaks in the wall, marked with a flag on the map. You should know you are in the right spot if you drag and drop the explosives from your inventory into the middle of the wagons and it blows up in a cut scene.
You do not need to do the army quests right away, and can head north east for easier monsters, north west for slow undead (easy using ranged attacks, tougher up close), or even clear the area around Aleroth first. Explore the farmlands, etc if you want a break from killing monsters.