after you exhasut and place progress tokens say i only needed 1, what happens to the other 2? can they go on the quest card?

no, I do not think so. It places "up to 3" so if you only need 1.. it only places 1.

While it's true that effect that place tokens on a quest card go on the active location if there is one, this does not work the other way around. Cave Torch puts tokens on a location. If that location gets explored, oh well.

Look at it this way - you wouldn't allow Strength of WIll to place tokens on a quest card, would you? It's the same with the torch.