Now you must go to the Water Palace to meet Sage Luka and recharge the Mana Sword.
Go to the Water Palace
There are several ways to go to the Water Palace. You can either walk there, which will let you earn experience and money from fighting monsters along the way, or you can use the Cannon Travel service (just south of the Potos exit) and miss out on all of the money and experience. You can also choose to go through Pandora if you decide to walk to the Water Palace, which changes things slightly.
If you really want to use Cannon Travel, go east from the sign that is south of Potos.
I strongly recommend walking, though. Continue south from Potos. You will encounter a Rabite. There is a sign to the west that points south to Pandora. However, Pandora is blocked right now, so go west past the sign.
After going west from the sign you will encounter a Mushboom. To the west from there is a small stream. North from there, you find a sign that points to Neko's. Neko is an overpriced merchant, but he sells useful things sometimes. In this case, get a wristband from him. You may also want to get some of the healing items that he sells. He also runs an Inn here. He'll ask if you want to stay or shop, so if you want to stay at his inn, choose Stay.
Go east from Neko's place and then go north. You will see a group of soldiers. You can avoid a cutscene later if you don't talk to the soldiers, but as a result, you will have to wait longer to get one of the characters to join you, and you will have to fight a difficult battle to get that character to join.
But if you talk to them until they leave, then you will have to see the cutscene, but you can get a character to join you sooner, and completely avoid a difficult battle. The choice is up to you.
If you do talk to them, you find out that they are going to try to stop Elinee the Witch, and then they'll leave to go on their mission.
I recommend talking to the soldiers until they leave, because then it will be easier to get one of the characters to join you, and that character will join you sooner.
Go north to find the Water Palace. You'll see Jema outside. Follow him into the palace. Step on the switches to activate the bridges. Jema and Luka will be waiting there.
After Randi expresses his surprise that Luka is 200 years old, talk to Jema. When Luka is done with her explanation, talk to her again. When Jema leaves, talk to Luka once more. You can choose "The Fortress" and "Power..?" to move the conversation along slightly more quickly. To end the conversation, respond with "...Okay!"
Luka will help you seal the Mana Seed with your sword. Then she will mention seven other palaces that you must go to in order to seal the seeds there. Luka gives you a spear.
Luka will heal you up and allow you to save the game. Then she will tell you to go to Gaia's Navel by going south through Pandora. In Gaia's Navel, you must look for the Underground Palace.