I killed all the vermin for the old lady and moved Bal over the purple star but nothing happens.
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Same thing happened to me on my second playthrough, the first time I went with Baal and two troops to clean out the rats, and it worked, the second time I just sent the troops and the event didn't trigger, even if I sent Baal there afterwards. It's probably not Baal that caused it, but it's the only variation between them.