Enter Madora Beach. Go to the lighthouse and have Elle join you.
Enter Polpota Harbor and take her to the restaurant. Talk to Gilbert.
Enter Madora Beach and go to the lighthouse again to pick her up for a second time. As you leave Gilbert will take her.
Enter the SS Buccaneer to see them on the top deck. Go to the Captain's Quarters and talk to him. Go back to the top deck to battle the Orc.
Upon Completion: Return home, talk to Lil' Cactus, go downstairs (watch him write the Event on the leaf), and go back upstairs to save your game before continuing.