There, you have to fight the Kraken.
The Kraken starts off by attacking you with its tentacles. They can be hit with ranged attacks or with melee, when they are close to the edge. If you have a high-level Slow Time spell, you can roll to the side just as the tentacle comes down at you and then proceed to whack at it with your sword. Once all those are defeated, the head pops up and attacks you. You'll likely need to use ranged attacks to get him, in which case Multi Arrow is a good idea. Watch out for his green ray as it knocks you over, and can prompt him to go back underwater and send up more tentacles for you to fight. Once he's defeated, you'll get his tooth and will be able to escape. Continue on your way to Circle of the Dead and Lychfield Graveyard.
Once there Scarlet informs you about the existence of a key that is needed to find the Sword of Aeons. They key is hidden in the ruins of an old abbey at Hook Coast, however it will only reveal itself to one of their bloodline. She instructs you to find a way to Hook Coast and retrieve the key, in the mean time she will go find your sister. She then proceeds to unlock more of your power (40,000 exp).
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