Peng Problems is a side quest in the Orient (Act III). It is given by Zi Chan, a young guard captain standing near the western Rebirth Fountain on the Great Wall. He will tell you of a 'giant peng' blocking the way along the Great Wall.
Just follow the Great Wall to the east to find a larger Peng named Xiao - Colossal Peng. He's basically a stronger version of a Razorclaw Peng and uses the same mid ranged Sonic Wave attack. In addition, he occasionally summons a few Gibbering Pengs.
After defeating him, progress further to the east. When leaving the Great Wall and entering the Shaanxi Province, you'll encounter a commander named Bai Li Xi. Talk to him to complete the quest and receive your reward.
You can also talk to Zi Chan again to get some updated dialog from him, but this won't complete the quest.
Reward: 23000 experience, random magical weapon