The Frontier Awaits...
Once you arrive back at Myght's Tower and talk with him, he tells you that it will be ready in the morning and tells you to spend the night as he goes up to the roof to finish it. A few moments later, everyone is getting ready for bed. Walk around and listen in on everyone's conversations and then Alex and Nall automatically go to sleep.
The next day, talk with everyone on the top of the tower, but talk to Nash LAST. Just as Myght finishes the Balloon, Nash goes mental and destroys the Balloon Engine with one of his crappy Lightning Spells. Why that little son of a bit...grrr. (>_<) Shortly after, Royce appears and congratulates Nash before the both of them warp away to the Grindery after he spills his guts that the was working for Ghaleon all along. This leaves you with: A Balloon with no engine, a now even more cranky Myght, and a bummed out party. Amazingly enough though, Kyle, comes up with the answer! That is to use the engine from the Balloon that Shira made! After some indignation from Myght, he agrees, so head over to Reza.
When you get to Reza, talk to the Mayor and he'll get you the Balloon Engine for free instead having to pay a whopping 30000 S for it. Once you have the engine, you have a couple more things to do before heading back to the Tower. First, travel to Iluk and talk to the perv in the Northeast house to get Mia's Bromide 4 and watch a hilarious reaction sequence. Next, warp to Lann and talk to the dude who owns the boat you used so long ago. If you took my advice at that time and travelled back and forth between Lann Isle and Lann and talked with him until he started to repeat himself, he'll cough up Jessica's Bromide 2. Finally, go back to Myght's Tower with the Balloon Engine.
Talk with Myght's apprentice for an interesting tidbit of info, and then talk with Myght who goes up to repair and install the new engine. Not surprisingly, Laike shows up yet again. He asks you why you haven't left yet and you fill him in on the tragic events. The party splits up again into groups. Don't talk to Laike until you have spoken with Mia, Jessica and Kyle. Once you talk to Laike, Myght comes down the stairs and announces the Balloon is ready. Walk up to the roof and talk with Laike, then Myght. Everyone then boards the Balloon, and Laike and Myght have an interesting conversation as they fly away.
The scene shifts to the party, and after a bit of flying and a dramatic animation sequence, you are now at the end of Disk 1. Now the Frontier Awaits...