HiPhish: The first thing you must do is grind for money to buy food to grind for more money to buy more food to grind... you get the idea. The monster spawn reate is horribly low, so you best choice for making money is to go left from Lord British's castel until you find a town secluded by a mountain range. There are no guards in the town, so feel free to murder everyone for easy EXP and money. Once you exit the town all the inhabitants respawn and no one remembers the massacre you caused. Alternatively you could try grinding in the dungeons, but it's a much slower process.

Onc you have enough food and money you should buy decent equitment for your part (see the manual for who can wear what) and find a city with a guild store to buy torches from. With these you can enter the dungeons; in each dungeon you goal is to find the "mark", have everyone touch it, get hurt, but receive a permanent bonus in return.

Now you need to find a pirate ship, defeat the crew, take over the ship an sail into a whirlpool to reach the hidden continent of Ambrosia. This is where I can't help you further because pirate ships never spawned in my game, so I got stuck. Ultima III would be a pretty nice retro game if it wasn't for all the tedious grinding in the beginning.

HiPhish: The city of Grey has a guild shop, it's in the south west of the main continent. Yes, you must travel half the world to buy torches. This link has all the maps you need:
http://www.lairware.com/ultima3/Ultima-3-Maps.pdf

This is the sort of thing that makes me wonder if anyone even playtested this mess. The entire first trilogy is full of this time wasting BS. Don't get me wrong, I have nothing against a good challenge, but this is not challenging, it is simply statistically impossible without grinding, Without engough food you can't survive the trip and I've already discussed absove how hard food is to get when the monsters rarely spawn. A higher spawn rate and a lower food consumption rate woul have fixed all the shortcomings of the game (except for ships not appearing in my game obviously). Once you have overcome the tedious start the game is pretty cool though, it's cool to go into the dungeons, it's cool making a custom party and it#s cool to have battles on a tactical screen. i just whish i could skip the first part.

HiPhish: Yes, they are. One or two torches should be enough for a dungeon if you know your way, unless they get blown out by wind. I'm not sure if the torch is then destroyed or if you can still re-ignite it. In any case, they last much longer than the light spell, that spell is pretty much useless, casting enough light to get through the dungeo will require more MP than you could afford, plus you would have nothing left for combat and healing then.