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As I was on my way to the lost city, a random encounter has Manu in a tree, saying he wants to take me to his monkey home. Which is really confusing, as I never freed him from the cage, I never even found the cage tbh. I guess the creators were throwing me a bone... despite

-Nothing said I couldn't free Manu right before going to the lost city.

-This is Sierra, the kings of punishing me for screwing up. (Though to be perfectly honest, QFG2 is really the only game in the series that truly embraced that, but even then the AGD remake heavily lessened that)
Yes, Manu will help you when the time comes whether you helped him or not. Helping Manu actually does nothing except get you points.

If you're new to "Quest For Glory," you'll quickly learn that the Coles are very nice game designers compared to the other game designers at Sierra. You can die, but there are very few ways to make the game unwinnable in the entire series. That's one of the reasons "Quest For Glory" is easily my favorite of all of Sierra's adventure game series. And the few dead ends it does have aren't too cruel. As long as you haven't been saving over the same spot the whole time, you won't have to restore too far back if you do get stuck.

Granted I'm not sure if this is intentional kindness or not. I don't know much about computer programming, but I know that triggers must be programmed in. In this case, I think the Coles simply forgot to program an alternate thing if you didn't save Manu before the peace conference (but don't take my word for this). Nonetheless, considering the amount of cruelty in other Sierra games, I think we're overdue for some kindness. Also, the thought of Manu breaking out of his cage on his own and deciding to help some random stranger who enters the jungle is hilariously awesome!
Fun fact: Until I had read a walkthrough on GameFAQs, I never even knew that you could encounter Manu before that point. I never explored that fourth screen, so I never had that encounter.