How do I equipped 20lb. Of fish soup?

You might have enough bait to complete this quest but you will also need a fishing rod which means you have to visit Almeric the merchant (the same person you bought your sword from). In the Buy menu, the fishing rod is located in the ! Tab and the bait is under the leaf tab. There is also super-bait which makes it easier to catch big fish but isn't necessary.
At this stage of the game there are two places where you can fish, the market and your house. Since you are already at the market, simply scroll down to the bridge over the river. There should be a white fishing hook on the bridge. Tap that and select go fishing. If you want to fish at home, click the home button in your quest book then scroll up past your house towards the river until you find another white fishing hook.
You have to tilt your phone/ipod back and forth to "cast" and then tilt it to move the bait toward the fish until the bobber bobs up and down. When an exclamation point shows up tilt the device back to "set the hook" and reel the fish in. The box in the bottom right-hand corner will tell you how many pounds of fish you have caught. Once you have caught 20lbs. Click the x in the upper left corner to leave the fishing game. Then find Farmelin and give her the fish.
Fishing is also a good way to keep your Sim happy especially because you can sell the fish back to Almeric for a nice profit.