You picked up the Blessed Athame in the tower, right? It’s a special item. You need it for what you have to do next.

Maybe you should talk to Roan again in the Castle. I can’t remember if that’s necessary. Then you need to free Grah Hoth from his prison, and then he flees an you need to find him again (I always thought this part of the story was dumb). His prison is East of Erika’s tower, across the river from her. If you’re walking and not taking the teleporter, it’s west of the Abyss.