Yes, that's how the quest is coded. Arcanum is no Planescape: Torment. I mean, I am running around Caladon, unofficial patch and all, and when I ask Virgil about what should we do next, he says, "We should get to Caladon, but I dunno where it is, somewhere in the south I think".

Arcanum is a single-player videogame, so there is an infinite number of things you may want to do that you can't do. It's not complete enough or abstract enough to provide flawless character-player sync without substantial metagaming. There's always the additional puzzle of "I want to make my character do X, how do I translate it to game commands?" and it's obviously treated as a game feature rather than a shortcoming.

For instance, there isn't SPOILER ALERT a conversation option to offer the girl to get her off the Isle of Despair. Should you put so much Trust in the game so as to assume that, despite the lack of a bloody conversation option, the alternate solution is actually coded in? That the girl wouldn't run to hell and back with you as a free "does not count against your follower limit" character-less meat shield? And yet it is present, and I heard it even nets a fate point (though I never got one).

So yeah, this is one of those weird oldschool design trends.

"It doesn't really say, but you start outside the haunted inn, and one of the challenges is to get inside it. To do so, you have to go to this one particular location outside the inn, type "FIND," and when it asks you what you want to find, you have to type "LADDER." It'll say, "You have found one," and the ladder will be added to your inventory. Nowhere in the game is there any indication that there is a ladder to be found anywhere, nor even that you need one." --Sam Stoddard, The Early Years