Duran's quest starts out in a tournament. The guy across from you, Bruiser, is your final opponent. Keep using your A attack, and when the bar at the bottom of the screen glows green, press B to knock him on his back. He's really easy (and even if he kills you, you will be restored to full life, so you can't lose). After you beat him, King Richard will congratulate you. You then get a nice, long, detailed cutscene. Remember what Loki looks like. We'll see him again. Also, pay attention when he talks about the Dragon Emperor.
You'll wake up to find that the other guards have been injured or killed. Talk to the nearest one and the culprit will appear: a man dressed in red. Follow him. He'll reveal himself as a wizard, and play with you before hitting you with Fireball and Ice Smash. Continue through the cutscene until you have control again. Clearly, Duran is a drinking man. Anyway, leave the tavern, go north to the next building, climb the stairs, and enter the door there. Talk to the fortune teller. She'll tell you to go to Wendel and that you can get stronger through class changing. Go to Duran's house (it is in the southeast corner and is connected to the weapon and armor shop). Go upstairs to Duran's room, open up the chest, then leave the house. The next 30 seconds are teary-eyed scripts. Go talk to King Richard before you leave - just keep going straight north through every screen to get to him. After that, head south, and keep going south and east until you reach the Cleft of the Earth. Cross the bridge, and then sit back and watch the credits.