To unlock the gate to the second dungeon level, you need to assemble a torture chair. After finishing the torture chair, find the Forsaken Hermit in a 3-skull location and subdue him using the Scroll of Control. Until the scroll's effect wears off, leave the location to take the Hermit back to your castle. If you leave the location in time, the Hermit will be put on the torture chair in your castle. Use the torture chair and find out the way to the second level of the dungeon.