After escaping the Wolfskins on Mt. Garou, you reach Macarath and must tend to a sick ally.
Before the Battle
You might want to bring units that can use tomes/scrolls, because there are Fire Orbs in the northeast of the map that only tome/scroll users can use. These turrets will shoot a blast of fire at the enemy. The blasts aren't strong, but they hit multiple enemies in one shot.
Bring some of your Ninja as well, because there are four chests here. You will want to open them quickly, because there will be Outlaws in this map that can steal the contents of the chests.
Rout the Enemy
Make your way into the palace past the nearby Knights. The Outlaws will open the locked doors and take the contents of the chests. Prevent the Outlaws from escaping, then kill them to get the stolen goods.
You will then have to make your way through the winding path of the palace. As you go northeast you will get in range of the Fire Orbs, so quickly go southwest to minimize damage from them, and go get the contents of the southeast chests.
Then when you are ready, go northeast and kill the mage that is using the Fire Orb, and replace him with one of your own Tome/Scroll users.
Finally go north and fight Iago. You can't send archers against him because of his Bowbreaker ability, which makes it nearly impossible for a bow-wielding unit to hit him.