Welcome to the third episode: The Dome of D'Sparil. As you can see from the skies, you're deep underwater inside a massive glass dome. To go with this "underwater" theme, the levels of this episode often have substantial water features. As with earlier episodes, you'll have to start all over with finding weapons, ammo and items, and it's a good deal more difficult here than it was before. As a rule of thumb, use your Elven Wand as much as possible on Gargoyles and any enemies that are far enough away to not be a threat. You'll get all of your weapons fairly quickly, but it'll take two or three levels to build up your ammo stash.
Open the door—the wall with the large gold symbol—and go to the small room you begin in, and go out to a small courtyard. Ignore the Disciples of D'Sparil outside the nearby windows, and save your ammo. Look for three more identical doors, inside which is additional ammo. Hit the switch to open the bars. Inside this second courtyard is a building with a large window on the near end (save your ammo and leave the enemies inside for later) and the Yellow Door at the opposite end. Nearby is a wooden door exiting the courtyard, and next to it an odd tunnel/window of sorts. Look to your left just past the bars, and hit the switch you find. This lowers those four ledges in the corners of the first courtyard, on top of which are a Dragon Claw, a Bag of Holding and health. (Don't overlook this: without the Dragon Claw your upcoming task will be far more difficult.)
Go inside the door, where a hallway goes down a bit, passes the Green Door and a wooden door while doing a U-turn, and continues back up and around a corner. Skip the door for now and instead continue up the hallway (just dodge the Gargoyles if you're low on ammo). You'll go outside into a large flooded area, with another building at the far end that's out of reach because the step out of the water is too high. There's an Iron Lich guarding the area, but ignore it for now and save ammo. Instead, run around and collect the ammo, and then look back toward the entrance, and you'll see a stairway going up to one of the ledges. There's additional ammo and items up here, and you'll have a chance to take care of the Gargoyles around here and be mostly out of reach of the Iron Lich.
Go back inside, and down to and in the wooden door and to the large storeroom inside. There are many Wand Crystals in here, so try to prioritize collecting them while fighting the enemies. This is one of the few instances in the game where being ganged up on by Sabreclaws can be hazardous. Keep an eye on the hallway: the door to this room stays open, and the Iron Lich outside may sneak up on you while you're busy. And on this same token, if you lead enemies back out into the hall, lead them toward the courtyard and not out to the flooded area. Inside the storeroom, follow the left-hand wall and you'll come to a Silver Shield around a corner. At the far end of the storeroom, there's a long hall with a row of wooden columns running down most of it. This area is clogged with Weredragons, and if for some reason you're out of both Wand Crystals and Claw Orbs, it turns out that the Weredragons are one of the better enemies to use Gauntlets of the Necromancer on because they're less likely to attack and cause injury. Follow this path around the columns and into what looks like a miniature cathedral. Inside here is the Yellow Key.
Go back outside to the courtyard, open the Yellow Door, and collect the Green Key inside. Turn around when you pick it up: an area has opened behind you, with ghostly Undead Warriors firing their more-damaging red weapons. Go back inside, and go through the Green Door. You'll meet a new enemy here: the Ophidian, which has snake-like features and fires a volley of bluish magical fireball-like projectiles, followed by a yellow projectile. The Flame Orbs they drop when killed look like the single-round Flame Orbs you find, but have five rounds. In here is a Map Scroll.
Find and hit the switch in here, and go out to the flooded area. The switch opened a new area off to your left. Hit the switch on the pillar, and the step out of the water will be lowered so the building is now reachable. A small area behind you opened, with some enemies and ammo inside. Around either side of the building you'll find a Tome of Power and Wings of Wrath. (When you use these, remember to get to the Ring of Invincibility on the pillar with the switch.) Leave the Iron Lich, at least for now.
Go into the building and follow the doubling-back hallway to the end. The exit portal is to the side, guarded by another Iron Lich; saving ammo for this one is why you should pass up the one outside. Activate the wall between the big torches: in here is a Hellstaff. Your tasks here are now completed. If you want, you can take care of the Iron Lich outside and the Disciples of D'Sparil near where you began the level, but it might be better to let them be and save the ammo. Return here and step into the exit portal when you're ready to leave. (At level-end, one secret might not register on the tally. The problem secret is the top of the pillar where the Ring of Invincibility was: you need to stand on the pillar for the secret to count. If you just flew over it, you can ignore the missing secret. The important thing is that you got the Ring of Invincibility.)