Ya attacking the castle locks out the arena. You can advance it to the next round by chatting with the door guard after talking some number of times to others.
I have a character recruitment guide posted onto this page that only shows you the area each can be recruited. David is a tanky lockpicker but can’t join along with your healer.
I made a sequel called My Villain Castle posted here on itch but I never actually finished it so it’s still just a prototype.
I agree adding some more scenes with the entire cast would be best. I’ll add something like that when I get around to doing the next version. Recommending code 987666 for a subsequent play through. Also I recommend investigating the west canyon rubble tunnel before doing the zealot cave quest. The two secret points in the first two maps are the easiest to miss.
Oh, and NG+ is possible. I think it’s either at the top right of the world map or it’s at the roof of the mcguffin castle.