In the tavern, talk to the Suspicious Fellow and play the game. Get a Little Yellow Fellow. Small Key Turn back if you have no ninja bread, paper bag or Kingdom O' Magic Action Figure. Talk to guards. In the castle, insult the High Steward.
Put remains in paper bag, put action figure on throne.
The Palentire Stone works only after you have killed the High Steward. Use it on the keyhole beside the elevator. Kill all enemies if possible. Go in by the back entrance. Get the spell o' Airstrike.