After leaving Bunyan, head North to find the entrance to Mt. Glaus. Once inside, explore the surroundings to find some items. The enemies in this area are not very dangerous, but some of them may poison you. Use Teepo's magic attacks to defeat the stronger ones. You will also notice an escarpment characterized by lighter terrain, which you can only walk downhill. If you get off in the right spot, you will be able to find a Cloth Shield and a very useful Heavy Caro for fishing. Keep climbing the mountain until you reach a small house (on the side you will also find a dragon statue where you can save the game). There you will find Rei. He will tell you that he was sent here to kill the monster that has been ramsacking the farms and stealing the cows. While talking to him, you will notice him saying he is stronger than the monster if he is by himself. This abiltiy will not be seen or used until after later in the game. Be reminded though that to use Rei's "secret" skill wisely in the future, you will need to learn the Influence skill from the Boss Goblin.
Anyway, after some chat, you will have time to rest. The morning you wake up, you will fight the Nue. No need to be serious in this fight though. You can simply attack it and it will run away after a few turns. Follow it to the top of the mountain and you will find a cave, but take the path to the left before, to retrieve Vitamins. Than, go back to the cave.
A Trail of Blood
Simply follow the trail of blood left by the Nue. If you venture from the blood, you will find a roomful of cow carcass. Here you will find an invaluable Bent Sword. Near is also a Molotov. If you keep following the blood trail, you will notice it had stopped somewhere in the water. Check the skeleton here to retrieve 200 zenny. Upon leaving the room, Teepo realizes the Nue must have jumped into the water. Now head to the other passage north of the cave. You will find human bones in here, inspect them for a Ballock Knife. There is another skeleton, on the right, inspect it to retrieve a Talisman. At the very end of the area is another cave enter it and find a river that leads to the previous room where the blood trail ended. Jump to the water and you will enter the room under it. Simply go straight ahead and you will fight the Nue for the last time.
Boss Fight - Nue
This is the first boss of the game and it's really simple to defeat. Just be careful to his Jolt attack. If you get poisoned, use Ryu's purify ability or an antidote. Use your regular attacks and Teepo's spells, healing yourself when needed and you should kill the Nue in a very short time.
A Mother fighting for Life
After you have defeated it, the Nue will cover the cave right behind it. Walk up to it and inspect the whole. In the cave past the dead Nue, you will find a nest of Nue cubs. They have been dead for a long time and the mother Nue hadn't realized it at all. After the sad discovery, leave the mountain and you will see Bunyan, who will congratulate you on the work you have done.
After the death of the Nue and the arrival of spring, things in the Yraall region will be much better. Teepo will suggest that you go to the village to see what people are saying about you now. Then head to McNeil Village, where the locals will thank you very much and will treat you better from now on. You will also notice a shady individual with a green cloak wandering around the country. You will have to talk to him to continue the adventure, but it is better to do some other things first.
First, two fishing spots will now be available in the Yraall Region. If you haven't done so yet, buy the necessary fishing equipment from the shop and start getting familiar with fishing. The fish you catch can be useful for restoring energy or in combat. In one of the two points there is also a Manillo shop (to catch Manillo, use the Coin as bait). It is advisable to buy at least a Silver Knife and an Iron Helmet from him to improve your equipment. You can also buy better lures from him to make fishing easier.
You can then of course buy with the money you got in your last mission anything that could be useful in the shops of the village. In a grove near the village you can also meet the first master of the game, Mygas. For more information on the masters, see the appropriate section.