Edward's Fight
After speaking with Rosa, a cut scene will begin, when Edward goes outside the house and is attacked by a monster. You will have to fight him, but it is fairly simple. Just attack with the harp and you will win easily. When this is finished, and you regain your party leave the town.
Find Mt. Hobs
Get into the Hovercraft and go back to what is left of Damcyan Castle. Now head towards the Antlion cave, except rather than going south towards the cave, take the hovercaft further right until you see a path in the mountain. Go into that part of the mountain, and you will be at Mt. Hobs.
Base of Mountain
As soon as you enter a cut scene will begin and Rydia will get over her fear and learn the Fire Spell. There will be 2 doors that you can go into, go into the one on the right (the left side has chests and a save point if you wish).
Summit and MomBomb
Continue up the mountain, and you will reach Yang fighting some monsters. In this battle if is best for your characters to just use physical attacks, using Rosa to heal when necessary. During the battle the MomBomb will grow, then split into 6 individual bombs. You should concentrate on killing one bomb at a time, because if the battle takes too long, the bombs will explode and cause a lot of damage to one member of your party. When you finish the battle Yang will join your party.
Down the Mountain and to Fabul
Go through the door immediately to the north. On the other side, go across the bridge and down to the south and off the mountain. Once back to the outside again, head to the east through the forest and the around the mountains until you reach the castle surrounded by a river. This is Fabul, so head inside.