Jo is suspicious of the Slags. Find out about the dead bodies at the Ghost Farm and find out what happened to Karl

After the Chosen One has delivered the Slags' message to Jo, he'll ask Chosen to prove they aren't dangerous. He sets a deadline of 31 days. When that time has passed, the townsfolk will head over to the Ghost Farm and take care of business.

Solution
You can say you want out and receive 700 experience, or tell Jo you want to join him in the attack, which will teleport you to the Farm of Ghosts for a battle. The latter will only net you some negative Karma.

Light 'em up
Aiding Modoc in a fight will teleport you, Jo, Grisham, Davin, Cornelius, Bathas, and Farrel to the Ghost Farm, where several Protectors with shotguns and several glowing slags attack. Although the townsfolk have marginally better weapons, most of them will die due to improper armor. In addition, Cornelius and Farrel are unable to use their weapons (a 10mm SMG and Brass Knuckles, respectively), despite having the proper animation frames.

Besides those two, all of the other townsfolk also spawn a new weapon. Balthas gets a Sledgehammer, Jo and Grisham use Shotguns, and Davin uses a Desert Eagle.

Find Karl
There also exists a more elaborate third alternative, as the quest title suggests. If you head over to the Ghost Farm, Vegeir, the leader of the Slags, will tell you that the bodies are fake, if your Perception wasn't high enough (i.e. 8) to find out yourself. He'll also inform you that Karl was spotted by the Protectors running off to the west. (Vegeir may also say he ran off to the northwest, but this is a false clue. And a brutal one at that, considering the already rather harsh time limit.)

If you came across Karl already and listened to his story you will know he is in the Den, and can tell Jo that, saving yourself the trip. If you didn't, you'll need to do so now. Take Vegeir's advice and travel directly west from Modoc. You'll find Karl drunk in Mom's Diner in the Den's East Side. Talk to him, learn his story, but be careful not to upset him. If successful, you should now have all the proof you need, so start the journey back to Jo and keep your fingers crossed you make it back before the 31 days have passed.

Bugs
In the Pip-Boy 2000, the word "suspicious" is spelled "suspecious".

If Grisham is killed during the battle, he will reappear in his house in Modoc, unharmed. Killing him will not result in him leaving a corpse, and leaving him alive will cause both himself and Uncle Biff to trigger the wedding.