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There is a part of the Foreigner Quarter south-west of the depot of Yalahar where a number of elves live. Head South then walk to the entrance. There are normal Elves and Elf Scouts on the first floor. In the buildings you can find Elf Scouts and Elf Arcanists on the upper floors. It is one of the best places to hunt Elves, since Shadowthorn is often on fire and full of Firestarters after the implementation of World Changes.

The deeper parts are also called Crystal Lakes. You can access them by going down a ladder in the middle of this place (here). Going down you will find one Elf Arcanist:
Elves Foreign Quarter 1

Going down another level you will find 2 Elf Arcanists and 2 Elf Scouts:
Elves Foreign Quarter 2

Now you are in a place with 4 ramps: North, south, east and west. You can take any ramp to get down in an area with ~5 Dragons and ~5 Elf Arcanists.
Elves Foreign Quarter 3

You can enter 4 different caves now, some containing only Dragons, some containing Hydras and Serpent Spawns as well.
Elves Foreign Quarter 4

If you are a medium leveled knight you can hunt the Dragons and Elf Arcanists and gain ~65k/hour and good loot. Don't forget to bring your Obsidian Knife to skin the dragons.

Ground Level
NameEXPHPLoot
Elf
Elf
Missing File
42100
Elf Scout
Elf Scout
Missing File
75160
Elf Arcanist
Elf Arcanist
Missing File
175220


Deeper Cave
NameEXPHPLoot
Elf Scout
Elf Scout
Missing File
75160
Elf Arcanist
Elf Arcanist
Missing File
175220
Dragon
Dragon
Missing File
7001000


Deepest Caves
NameEXPHPLoot
Dragon
Dragon
Missing File
7001000
Hydra
Hydra
Missing File
21002350
Serpent Spawn
Serpent Spawn
Missing File
30503000