1. Merlin now sends you on a quest to conquer Gruesome Keep, but he also mentions strange happenings in Welton Village. Leave Camelot and return to the area where the Wall of Flames that leads to Shield Heights is (if you want, you can restock some of your Power Orbs here.) There are two paths blocked by gates just to the south of the Wall of Flames. Merlin told you that he deactivated the gates since you beat Warlord Spike. Take the lower set of gates to get to Welton Village.
2. Immediately go north upon entering Welton Village and you'll see two healing herbs sitting side-by-side outside a house. This is a good place to stock up if you need to. Enter the house and talk to the Wise Woman inside. She's not very helpful is she?
3. Leave the Wise Woman's house and explore the village. There is also a Gemcutter and a Mapmaker in town, but neither of them are much help to you either. There are three items you need to find:
One is a pile of Firewood. It's right near a house (the one that has the bearskin rug inside.)
The second item is a Barrel of Cider. You can find it just outside the inn (large building at the east end of town.)
The third is the Iron Scraps, which you can find inside a house just south of where you got the firewood. Refer to the Maps Page if you are having trouble.
4. Leave Welton and go back to the Blacksmith. Talk to him several times and he should make you some Warlord Armor. He needs Firewood, Iron Scraps, and Cider, but since you already got all those items in Welton you can just keep talking to him until he hands over the armor. NOTE: You must talk to at least one person in Welton before talking to the Blacksmith. Otherwise, even if you have the necessary items, he won't help you. If he doesn't help you, go back to Welton and talk to either the Wise Woman, Gem Cutter, and/or Map Maker again.
5. Return to Welton Village and select the Warlord Armor in your inventory to put it on. Go talk to the Gemcutter. He will give you a gem called La Bijou du Porte, which works as a key to unlock the secret entrance to Gruesome Keep. NOTE: Make you sure you select Arthur's Armor in your inventory before you leave town because you cannot fight while wearing Warlord Armor.
6. Leave Welton through the north exit. Go east and take the lower path to the next screen. Walk along the trees and you'll see Nightshade again (same as in the first area.) Go ahead and get it because you'll need it (much) later. Keep walking until you come out into a huge open area, then go slightly south. You should see the Emerald of Reason lying on the ground near a tree. Get it.
7. Keep going east until you go over one more screen. Look along the trees that line the north side of this trail and you'll find the Goblet of Loyalty. Get it.
8. Keep going east and you'll come to the Cliffs by the Ocean. Go all the way down as far southeast as you can and you'll see the Ruby of Compassion sitting on the lowest promontory. Get it.
9. There should also be some Sea Flowers growing on this screen. Get them if they're there. If not, go back one screen west, then come back again. They should definitely appear now if they hadn't already. Grab a bunch.
10. Return to Welton village and enter the church. Go all the way to the front of the church's altar. Go into your inventory and select the Ruby, Emerald, and Goblet. If you did it right, they will be placed on the altar and the curse on Welton will be lifted. Now the people will talk to you.
11. Go talk to the Mapmaker. He'll give you a Map Scrap that shows the entire area of Blinder's Way in exchange for those Sea Flowers you picked earlier.
12. Go talk to the Wise Woman. She will charge "La Bijou du Porte" with magical energy. Now it will unlock the basement entrance to Gruesome Keep.
13. Important! Talk to the Wise Woman again to get the Scroll. If you cannot talk to her after charging the gem, leave her house, re-enter, and talk to her again. You must get that scroll!
14. Leave Welton through the north exit. Take the lower path east one screen and go past where you got the Nightshade, but before you come to the clearing where the Emerald was. Go north a bit through the trees and you should come to a grove filled with fairy enemies (Arthur is standing below the correct spot in my screenshot). Defeat them and go north. There's a secret passage here that takes you very close to Gruesome Keep. (At least I think it's supposed to be a secret passage because it doesn't coincide with my map.)
15. Go west through the hedges and then up one screen. You're at a cellar door. Enter it.
16. You're now in the basement of Gruesome Keep. You can get Lug's Shield here. Grab it and head for the boss. Refer to the Dungeon Maps if you need help.
17. If Gallop is not in your party you will fight Warlord Bash as Arthur. Refer to the Boss Strategy if you need help beating him. When he's gone, you'll have to return with Gallop to get the key. Congratulations! End of Quest #2.