I find his castle and when he says, "Do you wish for a Grand Adventure" I type what I assume is yes by either pressing "Y" or ENTER and he still says leave and begone?

The thing is the first time I did it he did offer me a quest to kill x monnster.

Does it have anything to do with the typing the lucky number and difficulty setting?

Press Y to accept quest. If you already have an ongoing quest he tells you to leave. I would just create a new game by using a different lucky number. Hope that helps.

It has to be a lowercase Y. Use the name field to make sure Caps Lock is off, or, if you can't get the game to register its turning off, just press shift+Y.

Does that help?

Whoa man this is ancient, and I since beaten the game with the updated 1992 version that fixed the issue.

Updated... 1992? I thought the old, bad version was from 1996; at least IIRC the date modified on one of the files says that.