After defeating the Mantis Ant, you receive a Sword Orb, and the man who talked to you earlier will pull you up.
Learn about Luka
Jema says that only you can recharge the Mana Sword, since you're the one who pulled it out. Jema tells you to visit Luka, the Water Sage in the Water Temple, to find out what to do next.
Talk to the Elder
Then go into the northeast house again. There will be a cutscene.
Before you go, go downstairs and open the chest to get 50 GP. Go back up, and if you want to see an optional cutscene, talk to the village Elder once more.
Then go outside and finish your business in Potos. If you didn't buy a bandanna from the shop, do that now. As mentioned previously, you can save the game by going to the inn, saying "no" when asked if you want to stay the night, and saying "yes" when asked if you want to save the game.
Leave Potos
When you are ready, talk to the guy in the southeast corner of town.
Now you have to make your way to the Water Palace.