Beginning Notes:

Ok, the simple answer is that there isn't really a "where" when it comes to finding runes or items. Item drops are random. The odds of getting better items to drop anywhere are influenced by several in-game factors - but where you are in Ancaria or Underworld isn't really an issue, so asking where to go to find a particular type of item won't help. Rune drops are also random, however there are in-game factors that influence your rune drop rate. There are also a couple places and enemy types where the rune drop rate is likely to be slightly higher, as told to us by our own balance master himself:

One last note: Lots of quests give runes as rewards and since Underworld you can also get Set Items on occasion. So if you are bored of the mindless killing try doing some quests to take a break. Wolf Eyes in Bellevue is particularly a great one for runes, you are guaranteed to get one rune and he quite often drops two.

In this FAQ you find answers for all the following categories:

Item Drop Factors:
Default Percentage for Set and Unique Drops
Special Item Find/Survival Bonus
Character Level/Difficulty Level
Enemy Type (Normal enemies vs. Champion enemies)

Additional Factors that effect just Rune Drops:
Runes read, Runes in inventory/chest, Runes spread over different CA's

List of the Most Popular Places to Hunt for Items

To Sum it All Up

Minimum Set Item Levels

 Default Percentage for Set and Unique Drops:

So if you have a 0% Survival Bonus and no items with the modifier "Chance to Find Special Items" then the above percentages are best you'll get for item drops.

 Special Item Find/Survival Bonus:

Special Item Find: Equipping items with the modifier "Chance to Find Special Items" can significantly increase the default drop rate percentage. Also an additional way to raise this modifier is to have a Dwarf use Forge Lore and his special Blacksmith Art to socket additional "Chance to Find Special Items" into your gear.

NOTE: If you are playing Underworld an easy way to see your total Chance to Find bonus is to hover the pointer over the small + sign on your character's picture, this displays a full bonus list. Be aware though, if you are playing as a Dwarf this list will not reflect the additional bonus you receive when using the CA Greed.

Survival Bonus: Unfortunately, no one to my knowledge has been able to fully figure out exactly how Survival Bonus works, but we do know that it will significantly affect your base Set and Unique item drop rate when at high percentages.

 Character Level/Difficulty Level:

Character Level: As I am sure you have noticed you can get the same items at many different levels and the higher the item level is then the higher the stats on the items will be. However, many items (particularly Set items) have a minimum level that they can ever be, so in result it is impossible for them to drop until your character reaches that level.

Difficulty Level: This goes hand in hand with your character level, since certain items will only drop at certain levels the chances of finding them in a lower difficulty level are small. Granted of course if you are playing in a lower difficulty level than your character really should be in it IS possible to find these items based just on your character level but they won't be found nearly as often.

 Enemy Type (Normal enemies vs. Champion Enemies):

As stated above Champion enemies are much more likely to drop better items than normal enemies, most likely this just has to do with the fact that their drops are usually larger than the drops normal enemies give so the chances of getting something good increases. However, don't be surprised if you get a really rare drop from a lowly normal goblin once in a while. Also as strange as this sounds.... I quite often will get much better drops from a Champion Goblin Shaman than I will from a Dragon. I really don't understand why this is but it is something to think about when deciding what to fight when you are trying to find better gear.

 Runes read, Runes in inventory/chest, Runes spread over different CA's:

I am not really sure on the technical reasons why rune drops work this way... but my guess is they created the game to drop runes more when it appears that you NEED more runes. It may also be the creator’s way of keeping you from just maxing out every available spell a character has which makes creating a quality build slightly more challenging as you actually have to think about what you want to do with your character.
But anyway, there are three things that effect how often runes will drop... how many runes your character has read total, how many runes you are holding in your inventory and stash and how many Combat Arts you have read any runes for. The key phrase for this is: less = more. The more runes you have in these areas the fewer runes will drop for you.

 List of Most Popular Places to Hunt for Items:

There isn't really a "best place" for finding items. I have found great Set items and even Icon Set pieces from the most mundane creatures. However your chances of getting better items increase if you are fighting Champion enemies and of course if you are fighting tons of enemies quickly. More monsters = more drops. Therefore some popular areas to hunt for items are:

"Orc Cave" in the Khorad-Nur desert
Orc and Skeleton Champions in the Khorad-Nur desert
Giant Spiders in the Shaddar-Nur desert
"Goblin Lawn" between Porto Vallum and Silver Creek
"Bear Cave" in the Valley of Tears
"Ghost Cave/Portal" in Highmarsh (this area is best for jewelry)
Shaddar Raptors and Elves in the Valley of Zhurag-Nar
"Dry River Bed" in Khorad-Nur (skeleton mobs)

Another bonus to fighting larger mobs of enemies is your experience and Survival Bonus will raise much faster.

 To Sum it All Up:

• Get your Special Item Find as high as you can while not making your character too weak.

• Fight defensively to keep yourself alive and your Survival Bonus raising. (if you are playing the WE the Xrystal set has a bonus to SB as well).

• Always fight monsters that are a higher level than you and do your best to play in the highest difficulty level you can reach (monster level doesn't seem to effect rune drops but it does effect item drops). Also fight Champions and large groups whenever possible.

• As far as finding runes... only read runes for CAs that you actually plan on using (this means planning ahead when creating a character), try socketing some of the runes you want rather than reading them, don't horde tons of runes in your inventory or stash.

 Set Minimum Levels:

Big thanks goes out to Rotluchs for putting this list together.

There is only one Minimum Level 6 Set for each character class, all other sets (and uniques!) have individual Min. Level requirements (so if your are looking for a specific set bear in mind that it will not drop until you/enemies have reached the required level).

Battle Mage:
Amarri's Secret 14/20
Blackstaff's Icy Invocation 34/45
Byleth's Fervent Furor 26/35
Dagowit's Mind Tricks 6/10
Mammon's Treasures 10/15
Paternus' Argument 46/60
Relmin's Protection 30/40

Daemon:
Draelokk's Wings 26/35
Dralkcib's Puissance 6/10
Kleb-Dracad's Remedy 34/45
Pandora's Box 10/15
Taelon's Judgement 42/55

Dark Elf:
Cordell's Dark Plan 46/60
Dark Path of Bahamut 6/10
D'Brae'Sineltei's Guise 10/15
Ethan-Rhys' Cunning Ambush 26/35
Huron's Assassination 34/45
J'Dahn'Nielo's Mastery 30/40
Khrag's Warrior 14/20

Dwarf:
Goilomn Gilisfon's Haste 42/55
Kabelrinte's Banishment 30/35
Rideg Stumel's Vision 10/15
Thar Eross' Blessing 34/45
Thodran Amfist's Rage 6/10

Gladiator:
Andiell's Malevolence 14/20
Dalmar's Eye of Wonder 54/70
Dark Side of Feac 6/10
Jacquaire's Looks 14/20
Lorgar's Healer 34/45
Raane's Audacity 30/40
Sirithcam's Consequence 46/60

Seraphim:
Abdiel's Revenge 34/45
Astrala's Powermonger 42/55
Dream Netting of the Gods 34/45
Lightning of the Sereish 17/25
Talia-Mel's Vigor 10/15
Thunder of the Sereish 6/10
Uriel's Legacy 14/20

Vampiress:
Annouk's Grace 10/20
Arhles T'gaw's Net 14/20
Dalmar's Grandness 18/25
E'sal Hy-Lef's Vicissitude 30/35
Recundis's Defiance 6/10
Starion's Mysterious Echo 34/45
Thorwyn's Relics 46/60

Wood Elf:
Araelfi's Return 34/45
Eyes of Polemides 6/10
Israfael's Dignity 10/15
Lloraneth's Furs 14/20
Meg An-Enid's Blizzard 30/40
Octanion's Alteration 46/60
Xrystal's Gossamer Wings 26/35