Bookwyrm627: I'm not sure where you encountered the problem(s), so I'll try addressing a few areas that seem relevant.
-If you've found the medallion, then the guards should accept it and let you pass without a fight. However, if you persist in starting conversation with them after showing the medallion, they will get annoyed and become hostile anyway. Each guard post is handled independently from the others; you are free to medallion or murder your way past each one without the other posts being any the wiser for it.
-No one takes the medallion from you. If it disappeared from your bags, then that's a bug. If you showed it to them and then ended the conversation before putting it back in your pack, it was dropped at your feet instead of automatically being placed back in your pack; this is standard and not a bug.
-The guards at the jail will accept the medallion, but they'll lock you in that small room between two portcullis', and you'll have to either pick one of the locks, use a key, or give them enough loot that they open the portcullis leading into the prison area. Talk to the troll on the other side of the portcullis if you end the conversation before they open the door. One of the guards at the jail post has a key to the portcullis (kill them to get it), and Tyball has the other; either key will work.
-You'll have to deal with Tyball before getting into level 8 proper; the other stairs to level 8 are basically passages around level 7 or dead ends (imp room).
You'll earn more mantra chants for skills as you level, ultimately being able to max out 6 or 7 skills. Shrines are completely interchangeable with regard to mantra chants for skills; it doesn't matter which one you use or when.
As for skills, I suggest maxing a single weapon skill (any except ranged), then focus defense, then attack. After that, it is up to you. Mana and Casting are useful if you do any spell casting. Lore is great to help id items, though if you are willing to save scum then the wand of identification has effectively infinite charges. Some of the others can be handy in certain circumstances, namely pick lock and repair. Swimming is completely redundant if you move through water using the compass arrows. Charm and Appraise can help with deals, but fish can do it better. Search doesn't help at all, from what I've seen. Traps are too rare to matter. I've never tried sneaking with Stealth, since I like light. A few points in Acrobat is nice, but it only helps if you hit a wall straight on; colliding while you are turned away doesn't activate the skill.
Thanks for the reply.
I was stuck just before the jail part. I was NOT in jail. The guards that opened the gate wouldn't talk to me at all, so I never got tricked by the troll.
It is possible that the medallion was dropped on the floor and lost in the bloodbath that ensued! haha But I couldn't not go back to that area (or so I thought, read at the end, P.S.).
As I said, I reloaded and played more carefully. I've already dealt with Tyball and have all the talismans, so everything is resolved.
P.S.: I'll add this - I later discovered a door I could bash down, so I wasn't entirely stuck. That lead back into the earlier part of the level. I had seen the door, but it was metal and locked; only later did I learn that "sturdy" doors can be bashed and not just wooden-looking doors.
