Once outside Naakhtkha's Castle, check your map again. In the Water Area (second from the top), on the eastern side, you'll see a castle situated at the beginning of a row of houses. This is Haaggkha's Palace. Head towards it.
The castle is a Pagoda. Enter and touch the symbol on the right (the Water Symbol) to deactivate the force field. Exit north.
Kill the enemy in this room and exit north. There's nothing of interest in the next room, so exit north again.
There's nothing in the next two rooms, either, so just go west and then north.
The Drakkhen in the stove room doesn't bother you so just exit north. Exit west in the next room.
Princess Haaggkha appears in the next room. Talk to her twice and she'll tell you that you have to defeat Prince Hordkhen and take his gem. Although Hordkhen helped you earlier, it's apparent that if you don't do this, he will join the Fire Troops and attack the Ninth Tear Allies. If you have enough room in your inventory, Haaggkha will also give you a powerful DragonSword. If you still have space, talk to her again to get a Dragon Cuirass. Equip your new stuff and exit the palace via the menu.
Head back to Hordkhen's Castle. It's been awhile since we've been there, so if you forgot where it is, it's the castle just to the left of the red and blue arrows on the map.
Refer to Part 1 of the guide if you've forgotten how to get past the shark and find Hordkhen in the castle. When you reach his room, you'll see that pretty much any chance to negotiate with this guy is thrown out the window as he threatens to kill you just for returning. What an ingrate. Hopefully, if your party is strong enough, you will defeat him and receive his gem. If you can't defeat Hordkhen yet, you may need to level up your party and visit the merchant at the inn for better equipment. If you're powered up enough, he should go down pretty easily. Check your status screen. You now have 2 gems.
Once Hordkhen has been defeated, exit the castle via the menu and return to Princess Haaggkha. Talk to her and she will give you her gem, too. That makes three. She also asks for you to check on Princess Hazhulkha, who lives in a castle in the southwest desert.
GO TO PART 3: THE FOURTH TEAR