After the long Journey to the temple, we should meet Nauxus. After the festival and Nauxus declaration of War, the Hero can fight Rogue Lizards in the Dark Swamp / traitor Swamp. Do not pick the next Quest of the War just yet. If Selye or Axel ask you, save the game and rescpectfully decline. We want to rescure Flo and the Soul Emblem first!!
At Day 10 accompany Snow for a fishing trip. After that you will be able to find lake island.
Go to the Bull Road and "Find the way to the lake Island". Meet Ebb and agree to rescue Flo.
After the meeting with Ebb, explore the Waterfall area until you discover a way to the Dungeon.