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First of all, you need to give Willie the Ring of Sar-Iss and something else, like runic armor.
Then, explore the dungeon, making sure Willie doesn't stray too far from the castle.
Capture and collect everything you can, including the Tear of Ashi. To the north is the second dwarven city; you need to reach it quickly.
Then, Zephyr emerges and systematically searches the area until he finds the evil gnome and his considerable army. Next, gather enough strength for the battle; Zephyr cannot use runes, which is a pity. The runes of incorporeality and battle rage could have decided the outcome of the battle, even without resurrection or with minimal use of it.