The quest says stand behind Friella and steal her mouse. I have stood in every possible position behind her and the steal icon does not display. I have also watched a video and see exactly where the guy was standing to do the steal - standing there does not work for me. The only requirement the game lists is to have two empty inventory slots which I have. Is there some other trick or is this quest just bugged?

IIRC, you can not steal or do any negative Karma action on Olvia servers.  Try swapping to a normal server to see if the steal ability shows up.

I switched over to Balenos and still could not steal. In any case, there was  a quest where you had to fetch some beer and rum for a guy on a dock in Valencia City and I stole from him just fine on Olivia.

Do you have empty slots and energy?

Unbelievable! Friella offers three quests. I had to accept her quests first then I could steal from her. 

That no longer works.  I remember seeing a recent change note about this that stealing is no longer the way to get the bait, but I can't find it now.  Meanwhile, the quest text still refers to the obsolete mouse stealing.

 Does anyone know how to complete this (main line) quest now? A pointer to the change note, maybe?

Thanks!

Edit: I had to complete those quests, and now can steal the mouse.  I swear that I saw an update about this though.

Edit edit: It's in this week's (2022.02.16) patch notes.  This is the text I remember from earlier.  I'm guessing it was edited out from some previous patch notes which is why I couldn't find it.  Either that, or I'm weirdly prescient on this one specific topic:

LMAO

The reason why ppl couldn't steal was cause you can't steal from an npc with 0 aimity, and instead of fixing the bug, they changed the quest kek...