I really like your writing style, it fits the world well and the first town feels like something out of an early 2000s CRPG (in a good way).
I agree with Grubwall on most of their feedback, especially locking and hiding the mouse cursor, I got very distracted seeing it fly off my screen while playing. I also did not see the Lady in Red walk into the forest, so it took a little bit to find her. Something that may help folks visually find her is if the forest is a little darker, but a dim light (candle or magical flame) is in the distance. Alternatively, you could alter the textures to look like grass that's been walked over so there's a slightly less obvious visual cue, but still something.
You should keep working on this project, I'd be interested to see where the story goes!