where is the final battle???

It's in the Hidden city.

Spoiler (select the text below to see it):
<font color="#3D2F1B">When you return from Candlekeep and get to Ducal palace you get to fight Sarevok. When you beat him up enough a mage saves his life by teleporting him away. Then you are also teleported into the thieves' guild by one of the dukes (iirc) and from there you go to thieves' maze. When you get out of it you will find yourself in the hidden city. Now all you have to do is to find a church (the only non-ruined building) and enter it.</font>