It is possible to complete the milkshake quest, not saying it isn't an issue, but it is POSSIBLE. You just have to put two kobolds close enough together that you can coat both of them with a tub of milkshake.
That being said, don't worry about it. That's the final objective and it doesn't unlock anything. The next one is placeholder and is literally impossible (it requests you to sell 1000 kobolds, but selling a kobold does nothing).