I believe this works like a blm would use a +2 elemental magic item. It basically raises your Wind Instrument skill +2 whenever you use a Requiem song. It will in turn increase damage that a song deals, duration of the song, etc, but it doesn't directly add +2 damage to the effect.
Yes, it's from the quest "Sweethearts of Dusk", which is the title translated from Japanese. I don't have the English quest title handy. The link below would lead you to the translated walkthrough, but the website moved. Look in the Bastok Port section at it's new location: http://mysterytour.web.infoseek.co.jp/ffxi/us/index.html
It's the third quest in a series from Carmelo, who can be found in the steaming sheep restaurant. The first of this series is "Love and Ice" http://ffxi.allakhazam.com/db/quests.html?realm=Bastok&fquest=357 You can find out the requirements to get the series started from there.