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Best Order of Missions
Beat the missions up to the one where you have to go choose between "To Loren", "To Zhufbar", or "Revenge" and choose Revenge. Beat all you can and recruit the new armies. Then go to Zhufbar. Beat the ambush and once in the town, ignore the Crossbowmen. Continue to Zhufbar. Once in the next town, do the farmer mission (very easy). Then get to Zhufbar.

Once there, do the Listening Gate and select everbody to go with you (Otherwise they walk like zombies). Have everybody head to the gate except the calvary and wolf dudes. Send them to the top most army (right next to the rock lobber) and have them attack. Then have everyone get to the gate. Remember, when the Dwarfs get to the gate, the gate opens for a limited time or until an enemy gets near them, so have everyone at the gates when the dwarfes get there.

Location of Magic Items
Here's an almost complete listing of the magic items that can be found in Warhammer: Shadow of the Horned Rat.

Notes:

These are in the approximate order that you may find them.
    ID        Item       Map
  Number      Name      Name
******************************

10- SwordOfMight (Protect Schnappelburg)

This item is in the very first mission. Found to the right of the clump trees in the centre of the map. Should probably give to infantry, as cav have a sword. But remember bonuses are cumulative. This sword gives the user bonus strength.

11- DragonBlade (Sven Carlsson)

On the 2nd or 3rd mission (Capture Otto Hiln) there is a snowman behind the house/tower in the top right corner. Once you have killed everyone, bring Your Calvary over to it and touch it. This will give you the Dragon Blade, the most powerful sword in the game. Now your calvary can use the Grudgebringer to shoot a fire ball and the Dragon Blade to do twice the damage.

6- ShieldOfPtolos (Rescue Ilmarin)

Found behind the clump of trees to the west. This shield increases the wielder's chance of deflecting missile attacks including war engines. I suggest letting Allor have this one.

8- SwordOfHeroes (Slave Train : a Carlson sub quest)

The item is behind the building near the graveyard. It is only effective against opponents with a toughness of 5 or more, like trolls. I'm unsure as to the actual bonuses. Probably give to cavalry.

7- PotionOfStrength

There are 6 potions in five different missions.

  1. Item is in the NE corner of the map. (Shattered Pass)
  2. Item is near the 2nd stream of lava on the east wall. (Valley of the Trolls)
  3. Item is near the two rocks. (The Vermin Burrows)
  4. Item is near rock to NE of the map. (Suprise Attack)
  5. Item is near some trees or a building just to the NE very close to your setup area. Another potion is somewhere on the map too.(Final Battle), this potion is the last item you can find.
The 6 potions of strength are only effective for one single battle but are useful due to elevating the character's strength by about 4 thus greatly increasing his chance to wound an enemy and penetrate the armour.

3- BannerOfWrath (Valley of the Trolls)

The mission is the suicidal troll mission to Loren. The banner is at the 3 lava pools to the west. There is also a potion in this mission but the banner is WAY more important. This mission is a waste of money unless the item/s can be obtained. The banner shoots out powerful lighning bolts. I suggest using the grudcav and ceridan because Ceridan never dies.

4- BannerOfArcaneProtection (The Vermin Burrows)

This mission is the skaven suicidal mission to Loren. The banner is between a rock and cave down west. I myself however have not confirmed this. There is also a potion in this mission. The mission is a waste of money unless the items can be obtained. The banner dispells hostile magic 50% chance.

0- BannerOfArcaneWarding (Suprise Attack)

This mission is the orc suicidal mission to Loren. The banner is in the West between the tents. There is also a potion in this mission. The mission is a waste of money unless the items can be obtained. This banner reflects hostile spells in a random direction.

5- TalismanOfObsidian (Squatter's Rights)

This is the 'save sheep in farm from goblins' mission. This item is probably the best in the game, it cancels all magic cast at or near the holder. The only way to get to this mission is to get to Zhufbar through the mountain pass, not underground. The item is in the far east behind the house. Give to cavalry, definately not to a mage.

1- BannerOfMight (Slave Assault)

This is also a excellent item as it adds to the unit's combat ability but I'm not exactly sure what it increases (most likely it makes the enemy unit break faster). It is one of the missions given to you in Zhufbar. The item is behind a pile of rocks near the north wall.

12- ArmourOfMeteoricIron (Bandit's Hideout)

This item is in the Bandit hideout camp mission after the Decoy mission. You do these missions at Nuln. But if you do any of the bandit missions rather then going to Loren right after talking to the Emporer, you don't get the Reiksgard Knight cavalry unit (your choice). The item is in the far west behind the tents. It grants the character extra protection from wounds (most likely a better armour rating). Give to any character you wish to protect the most, probabaly a wizard.

2- Dreadbanner (Extermination)

It is in the Exterminate skaven mission given in Karak Norn. An excellent item that makes the unit cause fear (now you can act the horifying monster part). But this mission may well take its toll on ya. Make sure you attack the caves. The item is in the eastern corner, near a cave.

9- ParryingBlade (Patrol Loren)

This is one of the missions you can perform whilst in Loren. It is a VERY dangerous patrol because you will be ambushed twice. And then you must fight the second Loren mission anyway...sheeze :) The item is behind the 3rd rock to the east. The rock just near the small valley. Makes the wielder more likely to dodge enemy attacks.

These items are found on various characters.

13- ArmourOfTheBeard
14- GrudgeBringer
15- SwordOfElior
16- RockSplitter

Playing Tip
Sometimes if you can't beat a mission (Loren Forest, the bridge one, etc.) It's good to purposefully lose them. To do so, only bring your grudgebringer calvary and have them go to the edge of the screen. as soon as someone charges at you, hold down the retreat button and run. You won't get the gold, but you'll continue (most of the time) to the next mission.
Strategies
Towards the end of the game you should have a lot of archers and cannons (Imperial, normal, mortars, and the Hell thingamajigger.) My advice is to bring all of them into a battle with a few bodyguards (Grudgebringer calvary, dwarves, etc.) and set them up in a line (bodyguard, cannon, archers, imperial cannon, bodyguard, archers, cannon, bodyguard, bodyguard.) As soon as the enemies get near, open fire and watch them squeel.