You've been imprisoned. Wait a moment for Yasato to help you get out. In the nearby cell there's a teleporter - activate it. A little bit ahead there're 3xMedals and Ancient Feather (in a cell with rat in it). Get through the gate and defeat the droid to get a key. Use it to free Jiro. Now go further and defeat more droids. Go to the second cell block. Free Marumaro and Zola there. There's Ancient Warrior's Ring here (a ghost will attack you when you grab it). In one of the cells there's a chest protected by a white force field. To open the huge door in the middle of the corridor, you have to close the doors to all the "corner" cells in both blocks, and open the 4 middle ones. A Sentinel Mecha Robo will attack you further. Go west at the junction.
After more scene you'll be able to save your game. You have to fight 8 droids at once two times now.
Later on, you are to chase the giant droid, avoiding the little ones that jump out of it. It's simple - even if you get in touch with some minor droids, you'll just have to fight them. Catch the giant droid twice to end the mini-game.
Canyon - East
Start by exploring the southern area, then head north. You should find: 2xMedals, 3xMedals, Iridescent Wind, The Way of the Thief, 7xMedals, Ultra Magical Medicine. There's a bridge to the north that will take you to a chest with 3xMedals. When you're ready, enter the village with green barrier all over it.