Forest of Illusion
Once you walk back to Tamur, stop at the Althena's Statue and then enter the tavern. Talk to Kyle and Jessica (who are super wasted, lmao) and Mia...but no sign of Nash. Hmm. *shrugs* Oh well. When you talk with Mia, she comments on where Nash could have gone and he comes strolling into the tavern. When Kyle asks him where he has been, Nash quickly shifts the subject and tells you about the commotion in the village square. Save your game, and stop at the Althena's Statue if you haven't yet, and then head to the North Square.
When you enter the North Square, you'll see that there is a man being hanged! If you take a closer look, it is that fool who was selling the fake medicine and that the people hanging him are the ones who saved your asses earlier with the exploding arrows. Choose the option "We have to help him!" and Alex cuts the man down. The man runs away after pissing in his pants and the man who saved you, now gets VERY upset and calls you a coward. He demands that you fight him to prove your bravery, and of course, a teeming Alex gladly accepts.
---------------------------------STORY FIGHT: TEMPEST---------------------------------
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Tempest
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Tempest is a very strong warrior, but you should be as well by now. Tempest will either use Flash Arrow or shoot you with 2 normal arrows. Neither attack is very strong, so just do the usual Vigor and Sword Dance and you should drop Tempest in 4-5 rounds. (This is the closest thing in Lunar to a scripted fight, so unless you REALLY suck, you can't lose)
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Once you beat Tempest, he is very impressed with you. He also fills you in on why he and Fresca (his wife) are in the area. A singer from the Prairie Tribe was abducted by Xenobia and they have been riding non-stop for 3 days looking for her. When Tempest finds out that Alex is on the same type of journey, he gives Alex the Dragon Necklace which is a symbol of Bravery in his tribe that he hopes will bring you luck. When the party takes a closer look at the Dragon Necklace, it resembles the Black Dragon. Time to go find Tempest (who just left) and ask him a few questions. Exit Tamur from the North Gate, and head south to the Forest of Illusion.
When you enter the Forest of Illusion, Mia comments on a strong magic presence, and you'll start on your way and you should notice how foggy the area is. As you walk around, the party will keep commenting on how tired and fatigued they are getting. Just keep turning them down until you follow these instructions to get all the appropriate treasure:
From the entrance (which is in the north and perfect center of the screen), Walk south and take the left path at the split. This will bring you into a clearing. You will evenutally camp out here, but not yet. From the clearing, take the western path. You will notice a very narrow north passage. It leads to a small cul-de-sac where you can grab a chest containing a Healing Nut. Nab it, and go back to the western path. It will curve south and you can choose to continue south, or go west. Take the west turn and head southwest to find a chest holding a Silver Light. Go back to the last split and continue south.
The path will curve to the east and you will come to 2 strange looking trees. Kyle looks for an exit, but cannot find one. After this, the party will whine about being tired every so often. The clearing is now due north of you but do not go there yet. Instead, head to the northeast path and you will nab a another chest with yet another Healing Nut. Take the chest and head back to the path leading east.
This path will wind around to the north and split. Stick to the right and keep going north. When the path splits right and left, go right first to claim a Holy Hairpin from a chest. Once you grab that, go back and take the left path. That will wind north a bit and lead to a chest holding a Chira's Tail. Once you get that, head back to the split.
Back at the split, head south and take the left path and then then next left path again. In the small clearing, head north to finally arrive back at the main clearing. Elect to camp for the night. After a small discussion and a warming talk between Jessica and a "sleeping" Kyle, Alex will have a bad dream, and then morning will come. When you awaken, 2 members of the Prairie Tribe demand to know why you are in thier Forest. Just before things get out of hand, they see the Necklace that Tempest gave you (although they call it the Black Dragon Pendant...hmm...ya think?!) and withdraw thier assault and ask you to follow them. So, follow them and they lead you to those 2 odd looking trees. They show you the spell to open the path, and then continue without you.
Once you regain control of the party, don't head south to the exit just yet. At the end of the east and west paths are 2 chests, holding a Star Bracelet and Dark Shield. You NEED THESE TERRIBLY for the upcoming dilemma, so take them and then exit the Forest and head southeast to Pao, home of the Prairie Tribe.