After Lloyd joins you, you need to take him to Duncan's Factory to get rid of the boulders blocking the train tracks.
Level Up Lloyd
You might want to withdraw all your cash, then use the Onyx Hook to return to Magicant. Talk to the cat in the water and say No to get Magic Candy, and use it on Lloyd to increase his Fight stat.
Then fight battles until you can afford to get the Magic Coin ($1200), Gold Ring (a.k.a. GoddessBrac in the fan translation) ($1510), and H2o Pendant ($700) for Lloyd. This will help him survive until he has leveled up some more.
Then return to Merrysville. You will have to go through the Crystal Cavern to leave Magicant. You can't use Bread Crumbs to leave Magicant.
Prepare for Duncan's Factory
Buy a weapon for Lloyd. The Boomerang is the strongest option. You can buy it in the Merrysville department store.
You can also go back into Sweet Little's Factory to get more Bottle Rockets for Lloyd from the trash can that gives infinite Bottle Rockets.
Get some Bread. Ninten and Lloyd can each have Crumbs going to a different destination. There are a couple of places where you might want to make Crumbs. You could go to your house in Podunk and Use the Bread there. That way, if your inventory is full, you can use the bread crumbs to go back home, drop things off with Minnie, heal up, then go east from the northern houses of Podunk to return to Merrysville. And if you're having trouble in the factory, you might want to make Crumbs in the Merrysville hotel.
When you are ready, go north from Merrysville and follow the train tracks northwest. Eventually, the train tracks will be blocked by boulders. Go west from there, then go north when you can't go farther west. Eventually, Ninten will find a Pass on the ground. Keep going north. When there is a fork in the path, go northeast. Keep going east until you find Duncan's Factory.
Talk to the dog outside of the factory, then use the Pass. You will have to fight the dog, but it's an easy fight. Afterward, go into the factory.
Duncan's Factory
This factory is very large. There are many good items that you can collect here, and there are also some items that aren't very helpful. This walkthrough will tell you which way to go to collect all of the items, but feel free to skip any that you don't feel like getting.
IMPORTANT: You have to keep Lloyd alive throughout the factory or you won't be able to complete it! If Lloyd dies, leave and revive him at a hospital, then try again!
Short Route
If you just want to skip most of the items and get only the important stuff, all you have to do is go to the right until you find a ladder, go up it, then go north and up the ladder there. From here, you can go left to find another ladder. Go up it. Then go right and then up the ladder. Next, if you only have one Franklin Badge, go left and up the ladder, go east and into the door to get a Franklin Badge, then go down the ladder and go east until you find another ladder. If you already have two Franklin Badges, just go to east to find the ladder and go up it. Go left from there and up the ladder, then go to the left again and up the ladder there, then finally go west until you find a door (not the one in the north wall, but the one west of that). Go through, go to the leftmost side of the room and Check on the rocket launcher that has a rocket on it. Then skip ahead to Leave the Factory.
Long Route
If you made bread crumbs in the hotel, you can use your crumbs to go back there and rest if you are running too low on health.
From the entrance, go east, and look for a ladder in the south wall as you go east. Go down that ladder and go east. Enter the room to get two Bottle Rockets.
Then leave that room and go west to go back up the ladder. From there, go east, and look for a door in the north wall as you go east. Go into that door to get a Bomb.
Then leave that room. If you don't want a Rope, go to the next paragraph. If you do want a Rope, go east, and look for a ladder in the south wall as you go east. Go down that ladder, then go west and go through the door to get a Rope. Leave that room and go east and go back up the ladder.
Go west and look for a ladder in the north wall as you go west. Go up that ladder, then go east to find a door. Go in to get the Super Spray. You can use this to kill insect enemies. It can be used many times.
Leave that room, then go west, then go down the ladder in the south wall. After that, go west. You will go back to the entrance. Feel free to leave the factory if you need to heal up.
From the factory entrance, go west, and look for a ladder in the south wall as you go west. Go down that ladder, then go east. Go into the first door in the north wall to find a LifeUpCream. Leave that room and go east and go into the door there to get a Physical Capsule, a Quick Capsule, and a Wisdom Capsule.
Leave that room and go west to the ladder, and go up it. Go west from there, and look for a door in the north wall as you go west. Go through that door to get a Bomb.
Leave that room and go southwest, then west. Go down the ladder in the south wall. If you don't want a Rope, go to the next paragraph. If you do want a Rope, go east and enter the room there to get a Rope.
Go west, then go northwest when you can. Go up the ladder in the north wall. Go into the room at the top to get a Bomb.
Leave that room and go east, and go up the ladder. Then go west and go up the ladder. Go into the room there to get a PSI Stone.
Leave that room and go down the ladder, then go east and ignore the ladder going down. Go east and go up the first ladder that you find. From there, go west, and ignore the ladder going down. Keep going west and go up the ladder that you find. Go north and go up the ladder there, and then go east and go up the first ladder. In the room, you will find a Life Up Cream.
Leave that room and go down the ladder, then go east and go up the next ladder. Go northwest from there and go into the room to get a Bottle Rocket.
Leave that room and go southeast and go down the ladder. Go east from there, then if you want a Rope, go up the next ladder and enter the room to get it. Otherwise, skip that ladder. Go east and go up the next ladder. The door to the north contains Bread, and the door to the east contains a Franklin Badge.
From the area with the two doors, go down the ladder and go east. If you don't want a Bomb, go east, then northeast when you can, and go up the ladder there, then skip to the next paragraph. If you do want a Bomb, go east as far as you can go, and you will find a door. Go in to find a Bomb. Then leave that room and go west and look for a ladder in the north wall.
From there, go west and go up the ladder. Ignore the door on the right, because it's just a dead end. Go west and go up the ladder that you eventually find. If you want a Force Capsule, go east and go into the room to get it.
Then go west along a long path. Eventually you will reach an area with a door to the north and another door to the west. Go through the west door.
Go to the leftmost side of the room and Check on the rocket launcher that has a rocket on it.
Leave the Factory
You did what you came here to do, so if you made bread crumbs, use them to exit the factory. If you didn't make bread crumbs, then leave the rocket launcher room, go east and go down the ladder, then go east and go down the ladder there, then go east and down a third ladder. Then go southwest and go down the ladder there, then go east and down a ladder. Go east again and go down both ladders. Then go west and go down the ladder, then finally go west until you can go northwest. You will reach the exit of the factory. Go through that door to leave.