I seem to have misplaced the Riddle Scroll despite keeping it in the inventory for half the game. Now I'm in Yvel and Sadie is asking for it. Is it required to beat the game? I hope not or I'll have to search all of the White Tower for it.

I think you will need to find the riddle scroll. You might be able to hex-edit your savegame to add it back into your inventory somehow?

Also this link may be a good reference:
http://www.landsoflore.de/board/viewtopic.php?f=4&t=937

UGE - Universal Game Editor to the rescue. I have just started a new UGE topic here. If you have a save game from when your party possessed the scroll, you can learn its all-important item code. This enables you to restore the item to your party.
(Assuming you are playing Lands of Lore: Throne of Chaos.)

Thanks for the responses. I searched the inventory again and was able to find the scroll (that interface is pretty bad) but this should be useful for future players.

You have to give it to Jeron so he can mark the Earth powder down so Sadie will know what you need, since she can't decipher the riddle herself. This is actually the only time in the game you're absolutely required to have the scroll on you in order to proceed.

Yeah I eventually found it and beat the game.