ANSWERS: 2
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Hi, there is a walkthrough that will help you here http://www.bellaonline.com/gaming/strategy_lib_khwalk.html
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In traverse town, go to the third district (where donald and goofy meet you for the first time). There is a door with a symbol of fire on it. Do a fire magic to it and it will open, Merlin is in the house there.
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