Teddy is a quest item. One of the students has lost it and will help you only if you find it for her. It is found by searching the bushes near the Digsite during the quest. After the quest, players can find it by pickpocketing the student they gave it to. Marfet or Torrcs on 1st floor[?] of Varrock Museum tell the player how to re-obtain the teddy bear when spoken after the quest.