After meeting with Joshua Graham at the Dead Horses camp, he first needs the Courier's assistance in finding pre-War tools to help prepare his people. These tools will help Graham and the Dead Horses navigate beyond Zion, should they ever need to leave. The Dead Horses or Sorrows won't go look themselves, because they refuse to enter pre-War buildings.
The broken compass can be found under one of the skeletons in the crashed scout bus. Once found, one can either leave it, take it in its current condition, repair it (with a Repair check of 30), or repair it with the compass sensor module found near the front of the bus. One can then also take it to a workbench and fix it there. Repairing it will add the compass into the inventory and complete the quest. Then take it to Joshua Graham.
When asking Follows-Chalk about the crashed scout bus, he will name the scouts the "little ones" because they look very small for scouts in his point of view. Items around the crash site reveal a disturbing truth.
If repairing the compass without parts, and then picking up the compass sensor module, the module will become stuck in the inventory as a weightless quest item.