Mithril Horde I - Michele Laconto's Guide to Find the Sundel Bulong
This is the location of the Sundel Bolong. (Thanks to Andorra! I couln't find it either!)
Find Lily for her mother, Yuli Hartini who is in the Outer City of Poniniakh. After you find and talk to the Sundel Bolong, she will be home in her room.
You will be able to find the Sundel Bolong in the Ghost Realm and ask about Lily for her friend, Istara who lives in the Outer City of Pontiniakh.
To be able to find the Ghost Realm, you need to go to Bethlusaa's lair and do the quest for the Digraced Knight. He will give you the ability of ghost speech. You then need to go to the Khadria Ruins and tap the trees near the sign there. A ghost will appear. It will open the way to the Ghost Realm (It will be in a wall to the east). Go inside and there will be a place on the wall to the southeast that you will need to tap to find the 'Sundel Bolong'.