The cowl itself can be found on the corpse of an assassin inside a secret room in Hag's End. While Hag's End can be accessed before accepting the quest, the pull chain to open the secret door will not appear until Olava has been visited.
Always add 360 , PS3 , and PC to clarify which system the bug appears on.
Click to see bugs encountered
360 There is an error in loading its texture, and the game will allow the player to equip some certain second head armor such as Dragon Priest Masks, combining both armors' enchantments and armor ratings. This is verified to work with the Falmer Helmet and circlet combo for a total of three head pieces. (360)
360 The cowl can be worn under all types of head gear - from generic to unique, clothing to heavy armor helmets - when equipped first. Head gear listed above the cowl will equip normally. Head gear listed below the cowl will de-equip the cowl when interchanging between the 2nd head gears. Either re-equip the cowl and then equip the desired head gear or manually de-equip the old head gear before equipping the desired head gear.
360 Cowl will count against the Well Fitted Heavy Armor perk, removing the 25% armor rating boost even after equipping a Heavy helmet on top. Cowl's armor rating is still applied.
360 A random but stable bug allows you to equip a circlet instead of the cowl under your head gear. Select the cowl first and then select a circlet of choice. Then select the desired head gear to wear over it. This will de-equip the cowl but leave the circlet on with the head gear and all enchanted effects intact.
This will NOT count against the Heavry Armor perk, allowing you to gain all the benefits of the skill tree.
Circlets will show through hoods and maybe light armor head gear. (Tested and confirmed for Khajjit wearing Nightingale Hood)
PC 360 PS3 When worn by Khajiit, Dunmer and Argonians, cowl is not visible and removes hair style. This has also been confirmed for Imperials. Apparently, this will also remove the cowl's armor rating from your character.
360 To at least gain the cowl's effect if this applies to one, he or she must wear a Dragon Priest Mask or perform a Falmer Helmet/circelt combo.
PC PS3 It does give the armor rating, plus the enchantment, and it also stacks with any other helmet's armor rating or enchantments. (Regular hats work as well. Confirmed on Khajiit and Argonian characters.)
PC 360 Khajiit and Argonian characters may still gain the armor rating and enchantment effects from the Ancient Shrouded Cowl, and another helmet, but the cowl will remain invisible.