After you defeat Tropicallo and take Popoi with you, you can use Watts's Axe to go through the Haunted Forest.
Go Through the Forest
Use Watts's shortcut in the Dwarf Village and go outside to Gaia's Navel. Use the northwest exit, then go north to the warp point into the Haunted Forest.
From the warp point, go north, then up the stairs. Go east and then north to reach Neko. Go east from Neko and go up the stairs, then go the the west to reach a warp point. Use it.
Go to the right, then down the stairs. Go southwest to reach a warp point. In the next area, kill the Eye Spy. It makes Chobin Hoods appear, and it can Moogle your characters, turning them into Moogles temporarily. After you kill the Eye Spy, step on the upper warp point to make the cliff expand over the mushrooms. Now go south and use the warp point to go back to where you were.
Go northeast, up the stairs, west, then down to the skull statues blocking the way. Cut them with the axe. Go south and use the warp point there. Walk east. (If the path is blocked, use the warp point and read the previous paragraph.) Go down the stairs to the right of the warp point. Go east, then north. Ignore the first stairs that you pass, because the path there is blocked. Instead, go west and up the stairs, and use the warp point.
Go east, then down the stairs. Go north, then west, then southwest. Continue north. Step on the warp spot and you will reach Elinee's Castle.
Right away you will be attacked by a Werewolf. It is fast and strong, so be careful. Go east from the entrance and follow the path around. There is another Werewolf in front of the castle door. Go inside.
Step on the switch to open the gate. Kill the Eye Spy and continue north through the door. In the next room, three of the chairs are actually Polter Chairs. They are lighter in color than the normal chair. After defeating them, go upstairs.
There are two sets of stairs up ahead, but both go to the same place. After killing the Eye Spys, go to the upper-left of the room (the upper-right leads to a dead-end) and step on the switch to open the gate and use the northwest exit.
Go up. A couple of werewolves will attack you. Continue through the room until you see some stairs in the south wall. Go down. Talk to the soldier who is standing near the bars on the left. The bars will open and the soldier will tell you how to use the button upstairs. Talk to Neko if you need to buy anything. He sells Cups of Wishes, which will revive dead party members.
Go upstairs and step on the switch. Walk north across the bridge that appears. Kill the Eye Spy and go through the door.
Both stairs go to the same place, so go up and kill the Eye Spys, then go through the middle door (the other two doors are dead-ends).
Follow the path, kill the Eye Spy, then step on the switch to move the wall. Go to where the wall moved and go west. Follow the path to the door. Go through and kill the two Polter Chairs. Go up and you will find Elinee. Follow her through the door. She sends Dyluck to Thanatos in the Pandora Ruins. Thanatos is the leader of a secret organization that wants to overthrow the kingdom.
Elinee sends Spikey Tiger to attack you.