Solution:

Having problems crossing the lake? Get and wear the loincloth first!

Can't open the big door? Unlock the display cabinet with the teensy weensy key and get then drop the vase to get a chunky key!

Kill the dragon with the sword to obtain a potion.

Get the whip from the "school" then give it to the nun to get a wrench.

Give the wrench to the couple on the bed to obtain a ladder.

Now you have the ladder you can enter the offices of Felt-A-Bore. The amethyst is in the pot with the cooking hobbit.

Drink the potion and turn the handle on the alchemist's tower, and enter.

Give the amethyst to the alchemist (don't go upstairs or you die).

(Source: Lemon Amiga)