A standard roleplaying environment: the tavern. This is another easy one to create in your own home, providing you have a large enough group of roleplaying friends. Let us assume your PC group is no larger than five, and that the rest of your friends can be NPCs. Let us also aim for an exceptionally seedy and unscrupulous city tavern.
In a good LARP it is desirable to separate the players out individually at some stage, because they are more suggestible and afraid when they are alone. Some form of individual challenge is probably the best way of doing this. One possible setting for this is a cave system, and it is probably one of the easiest to recreate realistically, and one of the most perfect for playing on fears of claustrophobia and darkness.
Young kid from last town has been following the PCs and doing a rather good job at it. PCs weren't expecting to be followed so weren't worried and the boy/girl was careful. Notice the follower a couple days out of town, kid ran out of food and started getting careless. Followed the 'mighty adventurers' to see if he could join them. Father is a wealthy merchant. Bring him home, bring him with, send him off? What do you do with an unwelcomed guest.