The haunted forest is located to the north of Gaia's Navel. You will arrive in the lower left corner of the map shown to the left. The only enemy that occupies this area are Chobin Hoods, forest creatures who attack with bows. They like to barricade themselves behind plants in order to make it difficult to attack them. You can either hit them over the plants with long range weapons, or chop down flowers with a sword or ax to gain access to them.
If you're arriving here shortly after the Sprite joins you, be sure to attack as many Chobin Hoods as you can, and the Sprite will rise very quickly in levels. Also be sure to rotate weapons around to give everyone a chance to reach level 1 with the new weapons.
Depending on how aggressive you've set your partner's AI to behave, you may begin to notice some problems with them not necessarily following you, and getting stuck on plants in an effort to attack Chobin Hoods. If this happens too much, remember that you can switch characters and manually take over whoever is stuck, in order to move them where you want them.
Head up along the left side of the woods, and then make your way to the right, clearing away any flowers that get in your way. You will eventually encounter Neko. Even if you buy nothing from him, be sure to ask him to save your game. Then continue up the stairs behind him, and over to the left, where you'll find a spot on the ground, teleport A, that takes you to the next area.
You arrive at the top of the area shown to the right. Near this location, you will encounter a Mushboom and a Blat. From here, there are two ways to go. You can head to the left, but that path is blocked by some barrier which can only be removed with the ax. Even if you have the ax and chop the barrier down, the teleport will lead to a dead-end unless to do some work first.
Instead of heading left, follow the path to the right first, and head down the steps. You'll see a Chobin Hood on the ledge as you go down. This Chobin Hood can't be approach and can only be hit by ranged weapons, so you have to decide if he's worth the effort to fight. Down below, you'll find more Chobin Hoods, along with a Mushboom and a Blat. Approach teleport B in the lower left corner.
Taking teleport B will deposit you in the lower left corner of the third area. You can't travel far in this small isolated section of the map. After walking up a short distance, you'll encounter an Eye Spy. These small eyeballs can generate Chobin Hoods. Attack them as quickly as possible to limit the number of Chobin Hoods they produce. Beyond the Eye Spy is what looks like a teleport spot, but is actually a kind of switch. Stepping on this switch causes some land to shift over, making it possible for you to reach the other side of the ground beyond teleport C.
Having stepped on the switch, you must now travel back to teleport B, and return to the second area. Walk back around and up to the barrier that you need the ax to cut down, and step on teleport C to go back to the third area. Now you can follow the path down the stairs, and on to the right before it leads back up again. Eventually you will encounter a set of stairs that lead to a pole in the ground. You can grab hold of these poles if you have a whip, which would enable you to cross over the gap and reach the "!" teleport spot on the other side. That teleport takes you back to the area just outside of the Water Palace.
For now, ignore these stairs and continue right until you reach teleport D. This will lead you to the fourth and final portion of the Haunted Forest. Head to the right, down the stairs, and follow the path as it leads you upward. Continue to fight every enemy that you encounter in an effort to increase your character's levels. Follow the path as it leads up, to the left, and back down to the bottom. Then follow the left side of the forest up to the top, and on to teleport E, which leads to the witch's castle.
The final warp of the forest leads you to the exterior of the witch Elinee's castle. When you head up, you are likely to be greeted by a werewolf. Take it out, but attack with caution, as its attacks are very powerful. Once you defeat it, you have three directions to choose from. However, all but the right lead to dead-ends, so it's better to simply head right.
Along the path to the right, you will encounter an Eye Spy. If there is a Mushboom present, the Eye Spy will only produce one Chobin Hood at a time. Otherwise it will generate up to two. Focus on the eye before attacking the others. Clear a path for yourself as you head up, and then back to the left through the middle channel. You may, or may not, encounter a Chobin Hood located in to the small pit that you can't access. Regardless, you should be able to attack it and remove it if you wish.
Continue to the left and attack the next Eye Spy. Defeat it, and any Chobin Hoods it produces, and then continue up and around the bend until you reach the front entrance to the castle. That will lead to the first interior corridor, shown right. Step on the switch to open the gate, where you will find another Eye Spy. Defeat it and proceed through the door above.
You will arrive in a small chamber with a desk in the middle. Around it are four chairs. Three of those chairs are actually Polter Chairs, which are magically animated and will attack you. You don't have to fight them but, as always, they are worth good experience points towards leveling up.
Climb the stairs behind them and you will enter a room with two bridges. Either bridge leads to an Eye Spy. Remember that, due to the three enemy sprite limit, they will only be able to produce one Chobin Hood between them until one Eye Spy is removed. Clear them both out, and then you must choose between door I on the right, and door J on the left. To open either door, you must stand on the switch before them.
Door I happens to lead to a small dead-end room with three Polter Chairs in it. Attack them if you like, but ultimately, you must travel through door J to proceed.
After passing through the left door, you will arrive in a new room with a winding corridor. There are two werewolves guarding this area, and they will attack aggressively. Focus your attacks on one and then the other. They have a tendency to heal themselves or each other, so be prepared for a longer fight.
After you clear them away, walk around until you see a switch on the ground. However, standing on the switch will not do anything. You're only option is to head down through stairwell K. This leads to a prison area. If you walk up to one of the cells, you will automatically open and free the prisoners. However, after talking to one of the soldiers, you discover that they are as spaced out as the people in Pandora. One soldier does tell you the secret to activating the switch in the room above: all three of you must stand on the switch together. In the neighboring cell, you will discover Neko. Take the opportunity to save the game, and buy any healing items you may need.
Then return to the screen above, and stand on the switch together. A bridge will appear, connecting you to door L above. You'll probably encounter an Eye Spy on the way. If the two werewolves are back, it won't produce an Eye Spy. Additionally, you can very safely attack the werewolves from across the gap using the Arrows and/or the Boomerang. Pass through the door when ready.
In the next room, you'll have a similar situation as before: two paths which lead up to two Eye Spies. The difference this time is that there will be three doors to choose from, not two. Door M on the left leads to a small dead-end room with three Blats. Door N on the right leads to a small dead-end room with three Polter Chairs, just like room I. Take them on, if you want, for extra experience points. But ultimately, you must proceed through door O in the middle to continue.
This leads to a room with a segmented hallway. The path to the left is closed off, so you must go up and around. You'll find a switch guarded by an Eye Spy. Remove the eye and then step on the switch below. A portion of the wall below will slide up, allowing you to go left from the entrance. Return to the bottom and head left, and then on up to door P.
You will arrive at the bottom of a staircase guarded by two Polter Chairs. Clear them away and proceed up the stairs. Walk up and around the desk to the right and you'll see the witch Elinee herself. Talk to her, and she'll only make a quick remark and disappear through the doors above.
Pass through them, and you'll witness Elinee teleport Dyluck to the ruins in Pandora. The girl will be very upset by this and ask what the witch did. Elinee will respond that she sent Dyluck to Thanatos, the leader of a secret organization bent on overthrowing the kingdom. Then she will disappear once more, but not before locking you in with her pet tiger Spikey.
Boss: Spikey Tiger
The Spiky Tiger is a dangerous opponent, even if you could handle the recent enemies without problem. Many of his attacks cause unconsciousness. When it jumps onto either of the two side platforms, it can only be hit with the Chobin Bow and Boomerang. While standing up there, it is likely to cast Fire Bouquet and Fire Breath.
It is best engaged by trying to avoid the tiger, building up attacks to their maximum charge, and attacking once ready. You can have the AI do the same by setting their action grid to AWAY/ATTACK. However, you may want to ensure that at least one of the bow and boomerang are free. It's also a good idea to keep your attacks on the left side, as he has a tendency to maul any one who stands near his mouth.
Heal anyone below 40HP, or possibly higher if the Spiky Tiger is inflicting more damage than what you can handle. Upon defeating the Tiger, you will get a Boomerang Orb. Anyone who died in battle is automatically brought back to life.
Head down to the previous room, where you'll find Elinee cowering in the left corner. Speak with her, and she'll beg for forgiveness. The magic that keeps her young will begin to fade. She will renounce her use of magic, and offer you treasure chests in return for your trouble. In them, you'll find some gold and the Whip, which you'll need to access the shortcut out of the forest.
Back to the Water Palace
You must make your way through the now-vacant castle, back to the entrance. Once you get back outside, the girl will be relieved to know that Dyluck is still alive. However, the boy will hear a voice in his head. Luka is summoning him back to the Water Palace. The girl and the sprite strengthen their resolve to accompany the boy. Follow the path back down to the forest. When in the forest, return through the final forest stage to reach teleport D. After teleporting, take the path that leads to the "!" teleport that you couldn't reach before. This time, stand above the pole to the left and the gap, and swing the Whip across to the other side. The whole party will fly over the gap, and you will now be able to access the teleport beyond, which takes you right back to the Water Palace.