**Many seem to be confused or think this achievement is glitched so I will sum up Rythmetic's great solution and explain the achievement's "randomness" more here for the newcomer's who don't want to read through all 20+ comments.**
First, you must enter the Millfields through Bowerstone and follow the path towards the lake. Once you get to the lake go right and up the hill towards the rocks that represent the Stonehenge as Rythmetic stated. Pay the man by the broken brigde *5000 (see update) and return later to cross the new bridge.
UPDATE ON BRIDGE COST (5/28/13): *It appears they have been continually changing the original payment of 5000; it was lowered to 750, it was FREE for a little while (credit: Zendozer), and now it seems to be back up to 750 (credit: Coinfrenzy, Nuka Cola Cap). I haven't played in some time, but the cost varies. Thanks for the updates guys!
Once that is done, there are 3 quests you have to complete to obtain this achievement. When you complete a quest, you will have to wait a little for the next to appear.
1. Rid Driftwood of Hobbes.
2. Take a letter to the carpenter in Silverpine (lots of balverines there).
3. Escort gambler from the upstairs of Bowerstone Market pub to Driftwood.
NOTE: Upon arriving to Driftwood, the gambler speaks of building things in the new found area (a casino for one) so he is definitely part of getting this achievement as he likely helps establish Driftwood into it's final stage.
Achievement explanation:
Having just received this achievement, I do not believe it is glitched like some think. It is simply about allowing time after you escort the gambler from the Bowerstone Market pub to Driftwood (3rd quest) to let the island "establish" into its final phase on its own - which is what unlocks the achievement. Much like when you rid Driftwood of Hobbes (1st quest), you have to allow time for the island to develop/establish into it's second phase (added bridges, shops, and lights) before the next quest appears.
EDIT (8/13/22): If it doesn't want to unlock, try sleeping in a bed until morning to help the island progress. DeadRose420 and RadiantCarcass mention specific beds such as a bed in a house you own and the royal bed working for them. Others commenting below have been sleeping until the next morning and that will sometimes force the island to progress/help the achievement pop if it is giving you trouble.
The random effect:
It is likely that the earlier you are in the storyline when you complete the 3rd quest, the longer it will take for the "island to establish." If that is true, then it would make sense that the later you are in the game's storyline, the sooner the island will establish after completing the 3rd quest; thus, making it seem "random." I believe this because of others' comments; however, this may not be the exact same for you.
My personal experience
I did not do the first quest until AFTER I became king. I finished the final escort quest at night and before morning came, the achievement popped when I was buying houses in the Millfields (maybe 15 min after finishing the 3rd quest). It will randomly pop after you finish the 3rd quest because you have to allow time for the island to establish into it's final phase.
How far along you are in the game may, or may not, have a part in how fast the island establishes after you complete the 3rd quest, but that is not confirmed - more my belief due to others comments and my personal experience. Hope that helps!