After falling off the train, you will see a young man named Rei. He will find you in the Cedar Woods with 2 Currs planning on eating you. Other than that, the dragon you controlled earlier is now naked and human.
Rei will take you to his house whom he shares with Teepo who apparently met the same fate as you - abandoned in the woods without a strip of clothing. As they let you sleep, you will see a man & a woman talking to you. Afterwards you wake up and wander about. You may save your game here with the diary at the other side of the room. Next, exit the house and wander about until yo get to town. Rei & Teepo will come out from one of the houses after trying to steal some food. Mysteriously, Teepo calls you your own name despite you not telling him yet. After a while, they decide on getting you to help them find food & they steal some equipment from the shop.
You then find yourselves on the road towards Yraall Road where the duo usually do their job, mugging people. As Teepo pushes you off onto the road, you realize it was Bunyan. He gives a stern warning and leaves off. Rei then realizes there is no one in Bunyans house. From then on, go back to the Cedar Woods and enter at the south of it, closest to town. It is also the entry closest to Bunyan's House.
Once you're in the forest, switch your leader to Rei. He will pick the lock in Bunyan's front door. From then, you're in. Once you gain control of Ryu again, go to the basement through a ladder at the northeastern part of the house. Check the cabinet and you'll find a Beef Jerky. Rei & Teepo will soon follow you. Before they decide to leave, Bunyan has come back. Rei tries to see what was going on and gets caught. Next is Teepo, then you.
After some talk, Bunyan sends Rei to Mt. Glaus while you and Teepo are left to chop wood. This is easy. Simply chop the wood with Δ (default). If you press to fast, you will hit Teepo. Press too slow and you miss the log. Just simply press the Δ button when the log starts to fall down. Repeat this until Bunyan says stop. After that, Teepo insists you follow after Rei to Mt. Glaus.