At this point, you can head back into the Tainted Grotto like you did with the Gem Mines, back to where you fought the Shaman. Here, you'll find in the bones behind where she stood a piece of armour called the GeoJacket, which is very useful as it absorbs earth damage.
You must head to Goznor. You'll find it crawling with zombies, which will attack you if you attempt to converse with them. Ignore them unless they're in your way; you get nothing worthwhile for defeating any of them.
All of the houses are locked, but you can enter the Monastery. Inside, Gallovar will give you a key, which opens a door in the sewers.