I found a Kobold by the quest givers inside the palace off the coin lards plaza. Two guards were beating him down while he just stood there. I eventually joined in and killed him; he had quite a few hit points for a kobold.
I hope this is not a bug, I thought it was cool evidence of the invasion.
I had already completed the Undermine quest and logged out then logged in later if that has any bearing on a possible bug.