When you arrive in the Wizard's House, enjoy the magic demonstration, then go in and talk to him. He's too busy (or lazy, or scared, or old, or barbous) to join you, but he'll do the next best thing and unload his apprentice Isaac onto your party. Magic users are always useful, so you should be grateful you got anyone at all.
You'll also get a Book of Strim. These things are just like Wings of Wyvern in Dragon Warrior. You can use them to return to any town you've already visited. You can use it to make your return journey to Astholm quicker. If you don't use it, you'll have to fight another battle on the way back. This battle, however is pretty much the same thing as your last battle, except with a couple less Musheyes, and with Isaac's help, so it's quite a bit easier. I recommend fighting your way back to get some extra experience and Gold.
	Back in Astholm, go to the Hospital to revive any dead party members (you really shouldn't have any...), then talk to the Elder again. You'll get an Ancient Armor. It's only slightly more powerful than your Hero's Uniform, but it's better than nothing, so equip it.
Sleep in the Inn to heal your wounds if you fought your way back. The strange guy in the Inn asking about how impatient you are is actually this game's clever way of changing message speed. So, if you're cool like me, tell him you're impatient so he'll speed the damn text up. If only Xenogears had that guy...*sigh*... You can also go to the item shop and buy some Herbs and Books of Strim if you wish. Anyway, after you're ready, talk to the guards at the southern portion of town to advance to the next battle.

PICTURE	NAME	HP	MP	AP	DP	EXP	G
	COMMENTS
	Ratachu	11	0	7	3	3	8
	-
	Stinger	10	0	9	3	3	10
	Flies
	Garmanii	11	0	11	7	5	20
	Can attack from 3 spaces away.
	Pyon	10	0	16	4	5	18
	Can move again after attacking.

This battle's much more difficult than your previous one. The enemies are grouped in two places, and you don't want to get sandwiched between them! So, before you engage the southern enemies, completely take out the five enemies near the top. As long as no party members go too close to the other enemies, they won't come up and attack you.

By the time you're finished with the upper enemies, there should be quite a few Stingers from the den flying around. This is what makes the battle tough. Unlike most other battles, you can't get next to the nest to unarm it, so you'll have to fight off the swarm yourself. Try to take out one enemy at a time. The Garmaniis have high defense and can attack from a few spaces away, so have Isaac use Burnas on them from a distance. That should kill them in one hit. The rest of your characters should deal with the Stingers. If you have Herbs, you'll probably want to use them in this battle. If not, have the Hero heal as necessary.