After you defeat Hakuryu, the White Mirror reveals that Princess Yuki is being held captive in Ryukyu.

Warlock Zone VIII: Ryukyu

Throughout this area, you will encounter Hannya Carpenters that throw hammers at you. The hammers will bounce around a few times before they disappear. Try hitting the carpenters before they have a chance to throw a hammer.

If you try to talk to the people here, it will just look like random symbols. If you want to understand them, you will need $980. (See the next few paragraphs for some ways to make money.) Once you have that amount, you have to go north to the palace, go through the main gate to reach the area with gold roofs, and go into the door to the left of the main gate. The shop sells a translation book for $980.

If you don't have three sets of sandals, you can go north to the northern part of the palace (with gold roofs) and enter the door to the right of the main gate. This shop sells sandals. It's worthwhile to get at least three sandals, because there are hidden areas that have a lot of money, some of which can only be reached if you have three sandals.

At the southern part of the palace (with the red roofs) you can find three hidden areas if you hit the lions. The leftmost lion, the rightmost lion, and the lion to the left of the rightmost lion all lead to hidden areas. Use the money you get there to buy more sandals if needed, and go back to the hidden areas if you didn't have enough sandals to reach everything.

Another way to make money here is to go to the employment center in the area where you first arrived (the area just north of the southernmost part of this area). Then you can play mole, paint, or goblin to try to make money.

In the southernmost part of this area, there is a Jutsu school to the left (but it's more expensive than in previous areas) where you can learn technique 2 (lightning) and technique 3 (flying). To the right of the Jutsu dojo, there are a couple of houses, and a logbook house where you can get a password to continue your game.

Go back north. The building here is an employment center where you can play mole, paint, and goblin to try to make some money.

In the area north of there, you find three houses.

North of that is the southern part of the castle, where, as mentioned before, you can hit the lions to find hidden passages that lead to lots of money.

If you go through the big gate in the southern part of the castle, you reach the northern part with gold roofs. The leftmost door goes to another jutsu dojo, where you can learn technique 1 (tiger), and you can finally learn technique 4, but it's very expensive.

To the right of that dojo, there are two shops, one that sells the aforementioned translation book, along with gold helmets and gold armor, and a shop that sells sandals, bombs, and whole pizzas.

To the right of those shops, there is a restaurant.

When you're ready to move on, make sure you have bought the translation book as mentioned above, then go through the big gate in the northern part of the palace. Talk to the Tanuki statue to enter the throne room. Go to the left and King Ryukyu tells you that one of the statues in front of the palace leads to an escape tunnel.

Leave the palace and go to the southern part of the palace. Hit the second lion from the left three times to destroy it. Go through the door, then talk to the Tanuki statue to enter the escape tunnel.