.. Sharpening the dagger

Did you talk to the Tree of Many. ( It says there is nothing on this side of the forest.)

Your way to the other side of the forest is blocked by the Mother Tree.

Now the door is open to the right. Go explore!

A grindstone. ( There is one in the basement of the watermill. Use the ladders to get down there. )

It is not turning... And the cogs are too heavy.

Did you spot the ceremonial bowl and markings up there?

Summon the Tomte to help you.

Get down into the basement. The grindstone works now. Sharpen the blunt dagger on it.