For some reason, Bokken (after he takes potions) and Grag the snake creature will not die. I have tried all forms of magic and acids and even healing, they just sit there and take damage.

I assume because they are broken?

I don't know about Bokken, nor why you would want to kill him but the Crag Linnorm is a dragan that can only be killed by Cold Iron weapons.

Nifty, ty! any idea where to get such a weapon? Also, in Pathfinder RAW dont' magic weapons count as silver/cold iron/adamantite depending on their plus?

Yes they do,

+1 and greater weapons overcome DR that is vulnerable to magic
+3 and greater weapons overcome DR as if made from cold iron and/or silver
+4 and greater weapons overcome DR as if made from adamantine
+5 weapons overcome DR as if aligned

according to raw... dunno about this game.

In my game there were cold iron weapons for sale at my capitol.

Sometimes you find them at questes, too.
I think, i found mine somewhere around the forest around olegs outpost. You are supposed to explore and see, whats around there. Just following only the questes has a lot of disadvantages.

And seriously? when fighting bokken, you must have been to a lot of more areas then just the starting area.