I remember in the old version you just went to a specific location in the Destiny Stone. Now it wants you to find 5 words/messages, etc throughout the game. I only think I came across two, maybe.

Anyone shed some light on this? If this has already been answered, sorry, I did search. :-)

(Assuming you're referring to the remaster)

Yes, you need to find 5 locations to get the clues, and you unfortunately need to find the clues rather than just look them up (or know from a previous playthrough).

Basically, the procedure is as follows:
1. Go to Saradon's Workshop .(I don't know whether the game checks this, but doing this gives you the Harmonic Staff, which has 25 uses of the Harmonic Gem effect (restores all SP to user), and can't otherwise be obtained.)
2. Get the Master Key if you haven't already. (Don't remember if you can do it in this order, but I *think* you don't need the key to do #1. Also, note that, unlike the originals, this particular item does *not* transfer.)
3. Go to the 5 locations that have the clues, in any order. Here's a link to a web page with a question who's answer contains all the locations (spoilers of course):
https://gaming.stackexchange.com/questions/341383/in-the-remastered-bards-tale-trilogy-where-are-the-dreamspell-words
Note that you can just teleoprt to 3 of the locations, but you unfortunately have to make your way through the dungeon to get the remaining 2 (and they're both late in the dungeon; one of them is even right next to the snare).
4. Make your casters into Archmages if you haven't already (this is required in this version, unlike the original versions where it was a 7th level Sorcerer spell).
5. Go into the Destiny Stone, step on the Dreamspell square, and you will be asked the 5 clues. (From what I've read, if you haven't found the 5 clues, the game won't even let you enter tue square.)

Incidentally, I wish there were a Legacy Mode option that would get rid of this side quest, remove Saradon;s Workshop (and the Harmonic Staff), and making learning the Dreamspell just a matter of stepping on that particular square in the Destiny Stone.

Do you have to find those clues to use the spellcode for the Dreamspell? You don't in the original version. Haven't tried the remaster yet.

In the remaster:
* You do need to find the clues to enter the Dreamspell square. (From what I've read, haven't tested it personally.)
* You do need to enter the Dreamspell square to learn the spell; furthermore, you must be an Archmage (of any level) to learn it. (Note that this is different from the original versions, where it was a level 7 Sorcerer spell.)
* The Dreamspell has to be learned this way in order to cast it; if you haven't learned it, you can't select it to cast, and a search for the code will come up empty.

(By the way, in the DOS version (and maybe Amiga version?), you have to step on the Dreamspell square with a character in your party in order for that character to successfully cast the Dreamspell; if you try casting it before then (and you have level 7 Sorcerer spells), you will just waste 100 SP and the spell will fizzle. Then again, in the DOS version, enemy thrown weapons will fizzle in anti-magic zones.)