The first objective in the stage tells me to find an explosive spore of some kind. I follow the objective marker and end up at a patch of grass that forms a cross. In the center an object spawns that creates a flow of blue energy between the characters. I am out of ideas as to what to do with it; I have tried most forms of damaging it, I even went as far as I could and obtained the flame breath skill. Which seems to have no effect on the egg either.

Okay, I am just a moron. For some reason in the key configuration menu and manual I completely skimmed over anything pertaining to inventory management. The enter key allows for you to pick up an item off of the ground. The command prompt is an option as well.
I tend to over complicate matters when hitting something fails to work. At one point I tried to push the object through-out the entire level. I made sure for it to get hit by machine gun fire and explosions.

Good to see you didn't give up on that problem... :)

press the r key and when you look at whichever character you are controlling at that time you will see that it is placed into the circle. then you must find a second one that is green do the same but with another member of the team. when you drop them close to one another they explode so don't stand next to them