This is the room when you go downstairs.
Entering this room is a BIG risk to you health. There is a way to get the treasures without dying, but it's risky. When ever you run into the Harpy, RUN AWAY!!! Strategy: Make everyone Knights, and use !Guard every round for everyone. After each battle, bring all allies back to life (don't worry about healing them because Harpy's attacks are one hit KO's). Get the chests and get out of there. If you want to kill Harpy, then come back when you have learned the blue magic spell, Aqua Rake (Harpy is weak against Water).
This is the prison. DO NOT release the Lone Wolf when he asks you. Releasing him will deprive you from the chance to get the Chain Whip later in the game.