Moonglow and the Lycaeum
As soon as you destroyed the second generator, the Time Lord mentioned the third one. Use the magic hourglass to talk to him again and ask more.
By now, you should have understood this pattern: each generator has an "outer defence" (for which you need a special item) and an "inner defence". The item(s) required for the outer defence are special helmets made of Caddellite. Brion of Moonglow knows more about it.
Brion knows that a caddellite meteor fell in the north-east sea, and he suggests he asks his brother for more information. You can find Nelson at the Lycaeum, but he just turns you to Jillian, in the same building. She confirms that an island called Ambrosia can be found in the north-est sea, and that a city on it was destroyed by a meteorite.
On the map, Ambrosia is located exactly under the compass in the north-west.
In order to access the two optional areas, you should get to Ambrosia by ship and cast "Weather" just before reaching it. The shortest sea route is heading south-east from Serpent's Hold, touch a cape east of Minoc, then continue straight east.
In order to land, you should sail through a bay from the south. A pier is on the east side of the lagoon, if you like. On the north of the bay you can meet the faerie Kissme, who gives some useful information.
Enter the nearby cave. As the sign say, "do not free the liche", although it it able of teleporting outside of its cell. More to the west of it, an illusionary wall pretends to block your way, but you can walk through it. You will reach a room containing a hydra whose name is Shando, Shanda, Shandu.
Open the secret door on the north wall. The hydra will engage conversation, then attack. No special preparation is required for this combat.
After the guarding hydra is defeated, follow the tunnel and take one caddellite fragment for each party member. You can now retrace your steps and leave the cave.
- North-east chest: 3 gems, 1 gold nugget, 3 food
- North-west corpses: two-handed sword, shield, torch
- South corpse: protection ring, 2 daggers
- Caddellite meteor: a dozen fragments of caddellite
The dust spread by Kissme negates any magic. You should cast "Weather" before reaching Ambrosia, so to wipe away said dust.
In order to access the building in the center of the lagoon, you should get to Ambrosia by ship. Cast "Unlock Magic" on the door. Inside there is just the corpse and the diary of Garret Moore. Apparently, he went mad after about 3 months (97 days) alone on the island. If we believe the last entry in the diary, he lived there 110 years (40232 days).
There is a bandit camp in the south-east. The south wall is an illusion: you can enter a secret area, but your way is blocked by energy fields. Therefore, cast "Dispel field" on the middle one, then move the caltrops away. Two metal walls are opened by the switches behind one of them. Cast "Telekinesis" on the switch closest to the door, then enter and operate the other one.
- Bandit camp: 5 food portions, bow, 7 arrows, 15 gold coins, locked chest (magic helm, crossbow, 22 bolts, magic sword), locked chest (protection ring, invisibility ring, 5 food, 3 flaming oil, 92 gold coins).
- East room: 7 powder kegs, 5 flaming oils, 100 arrows, many non-magical armor parts, many throwing axes, 9 torches.
- South room: 5 gold bars, 8 different potions, 3 lockpicks.
Zorn of Minoc
As the scholars of the Lycaeum said, the blacksmith of Minoc can forge caddellite mineral into special caddellite helms. Once all your party members are thus equipped, you can head to the Meditation retreat.