I'm going the Hung Over quest and it tells me to go to Mistress Margot, only she isn't where the quest tracker says she is. I'm just past the "Roses of Remembrance" section of chapter 1.

Are you in the cellar, where the real whore house is? The whore house like rooms on the top floor are sort of misleading.

The area with all the fist fighters and the monk? Or is there an even lower level?

Right, one of the doors down there leads to the whore house. I'm guessing from your reply that you are though, so no idea where your Margot is. I'm pretty sure she was there with her whores and rose-covered beds when I did that quest.

Wow, didn't even notice the brothel section of the cellar. Thanks for having me look around down there, found Margot!

After I woke up I immediately went and talked to Ves looking for my gear but of course she didn't tell me it was in the chest "right over there"...
100 orens and a shitty neck tattoo later I'm back in business, god damn it why did the people who made this game design their cities and towns with so many unnessesary doors, hallways and complicated streets..
Couldn't find that whore anywhere! Finally after going though 50 fucking doors into the basement i found her... only so she could take my money. Why the hell did I have to go on that wild goose chase?

Her location must be random...I remember finding here in the room at the top of the stairs sleeping in bed. I woke the bee-atch up!

Margot is in the basement (-1 floor) of the inn. Search the doors which lead into extravagant, crimson colored/decorated rooms. Otherwise, the room next to Sille's some people say, actually has Derae in (her lover and prostitute property girl).