Into the discard pile for reshuffling into the deck. There is a rule somewhere that states that monsters go into the discard pile unless otherwise indicated by other rules text (e.g., the book of secrets).
In Quest 3, one of the story events calls a critter into play which isn't described in the quest setup:
Spoiler (click to reveal)
Book of Secrets 3.13 summons the (B)(B) Bandit (the Keymaster)
Unlike most such story-event critters, it doesn't say what to do with that critter if it's defeated. Most say something along the lines of "When the Critter is defeated, remove it from the quest."
After being defeated, is this particular critter shuffled into the critter deck or removed from the quest?