This part of the game is only available after the split, and only if you chose to go to the castle rather than follow Ridley.
Any non-human characters that you previously recruited in this game will no longer become available for missions. They will still remain in your friends list in the menu section.
Meeting at Castle
If you chose to go to the castle, you will show up for a strategy meeting. After a series of cut scenes, you will gain control outside of the castle. Make sure you don't sleep at Jack's house until you are ready to progress to the next part of the game.
You are now free to recruit some more characters, buy new weapons, etc. If you are short of money, just buy the weapons instead of the armor. You will be getting two sets of new armor for free shortly.
Once you are done recruiting who is available, you might consider leveling up some of the new characters. On the other hand, if you have been leveling up a lot, it will take a long time to raise the new characters to the current level of your party. Since will you probably be replacing them with the guild leaders eventually, you might want to keep that in mind.
Thanos will tell you about a guy in Carl's Pub who turns out to be Jasne crying about Ridley leaving. You should visit Kain, Ortoroz, and Ray C. Ross (who is the owl in the president's office of the Vareth Institute). Each of them will assign two members to work with you. You should recruit them at this time, along with some additional characters that are now available. For more details, see Recruitment: Meeting at Castle.