If you have some food left on you, and you feel that you're ready to kill the first of the three demons you need to defeat in this quest, you don't have to bank, otherwise, return to Shilo and get some food, maybe a few super potions etc.
Go back to the fire octagon, use your bowl with water in it on the fire wall, and use the Book of Binding on Ungadulu, he will summon a demon to kill you. If you have the holy water vials, now is the time to use them. The demon will drain your prayer quite a bit, so be very careful. After you've kill the demon, Ungadulu will give you some Yommi seeds, and he will also cast a spell on you to protect you from the fire wall.
Go back to the pond, investigate it, and you will discover that the pond has been drained. Disaster! Call for Gujuo again, and tell him about it. He will tell you that the underground source has been blocked.  You have to go down and unblock it.
Gujuo will tell you that it's a very scary place down there, and you will need to make a potion to make yourself fearless when going down. To do this, you need two herbs; Ardigal and Snake Weed. 
When you have both the herbs, mix them together in your water filled vial and you will have the potion of courage. Go to the bank, and get out the 30 air/water/earth/fire runes, the cosmic rune, and the unpowered orb you need to cast a charge spell (Charge Water Orb level 56 magic is the lowest). Also, get a rope, armour and weapon, some lockpicks, a pickaxe, the potion you just made, golden bowl, of course your hatchet, machete and map, and then fill yourself up with food.
When you're ready, go back to the rocks where you entered the dungeon with Ungadulu earlier, talk with him, and then go all the way in to the 7 ponds, and you should see a big gate. Use the charge orb spell on the gate, and you should be taken inside. There will be a winch, before you go down, drink your potion, and then use your rope on the winch to go down.
There are some barrels in the winch room, which contains enemies and random stuff. They can contain food and rope. Barrels can also reduce your attack.
Now make your way to the bottom of the massive hill, the easiest way is to fail one of the agility obstacles, but you will lose a lot of health if you fail. Now you should see three different level monsters, San Tojalon (level 95), Irvig Senay (level 100) and Ranalph Devere (level 106). Kill one of each, and you should have three crystal parts. Head north and you should find a furnace, use your crystal parts on this. If you haven't already seen it, the dungeon you are in looks like a dragons head, you need to go where the eye would be, and then find the moosy rock around there with a search option.
Search the rock, and use your crystal on it. The crystal should now be glowing. Head towards the place where Ranalph is, and use your crystal on the heart shaped symbol on the wall next to the cave entrance there. Go through the cave, and you will be in a room with lessers, if you like, you can stay around a kill a few, when you're done, run further in the cave, and you should come to a place with the water source, and a boulder blocking this. 
There are two ways to do the next part.
One: The shorter, harder way: Try to push it, and you will be faced with a spirit. Talk with the spirit, and it will ask you for help with killing Vyveldy. He will give you a black dagger for this, so go back to the wizard's hat on top of the hill where you entered. Try taking the hat, and Vyveldy will appear. Stab him with the dagger, and it will start to glow. Go back to the boulder, drink a couple of potions of if you brought this, and push it again. The spirit will face you, and then send a demon to attack you! Kill it, push the boulder again (this time you won't be attacked), and use your bowl on the water.
Two: The longer, easier way: (If you aren't so strong, this will be the best way to do it, it will make it easier later on as well.)
Try to push it, and you will be faced with a spirit. Talk with the spirit, and it will ask you for help with killing Vyveldy. He will give you a black dagger for this, but instead of killing Vyveldy, go back and talk with Ungadulu, who will give you the Holy Force spell, which will weaken the demon a lot. You need a new orb spell, and another rope to get down again, but it will also give you a good chance to get some more food. Go back to the boulder and push it, then use the Holy Force spell on the spirit, which will make it turn into a demon, kill it, push the boulder again (this time you won't be attacked), and use your bowl on the water.
When you have your water in the bowl you can head back to the bank and get out the Yommi seeds you got earlier from Ungadulu, also get a hatchet (better than mithril), and use the water on the seeds, which should make them germinate. Call for Gujuo and tell him the good news. Now find a place with some Fertile Soil on the ground, and plant your Yommi seeds there. A tree will grow, when it becomes young you need to use some more holy water on it, and then chop it with your hatchet (need a hatchet that's better than Mithril). First cut of the branches, and then cut it again to make it into a Totem pole.
Find a Dark Totem Pole somewhere in the area, and use your own totem pole on it. Before you do so, make sure you're ready for a last battle. Drink potions and have food ready. If you choose to take the easy way before, you will only have to fight the demon, but if you choose the hard way, you will have to kill San Tojalon, Irvig Senay and Ranalph Devere again. When you've killed the demon for the last time, you just need to talk with Gujuo once again, and then head back to Radimus.