Instructions
Get the "Dragon Emblem." Use it to enter the "Dragon Shrine." Speak to "Steena" to receive the "Dragon Tear" and start a new quest. Go to "Marbule" and purchase Trap Elements to use during your fights with the dragon.
Return to your home world. Head to the docks in "Arni Village." Speak with the old man sitting beside his boat fishing near "Leena." Pay the man 100G and he will take you on a boat to Water Dragon Isle. Be prepared to fight the dwarves on your way to the island.
Head into the cavern. Unequip all of your blue element magic items when you approach the Water Dragon. The items will heal the dragon instead of hurting it if you attempt to fight with them equipped. Set an "Iceberg" trap and build up your element powers during combat. Attack the dragon with "red element" magic such as "Inferno" and "Volcano."
Steal the "Blue Plate" when the Water Dragon looks like it is sagging. You will get the Blue Relic, which gives you Ice Breath, once you defeat the dragon.