Two questions about the dungeon:
1. In the alcove where the converted dwelling creatures are (knights, archers, and militia), you can't recruit militia, i.e., you can summon them from the town, but you can't enter the alcove.
2. In another alcove, where the demons are, the prophet's hut - you also can't seem to enter, nothing is said, nothing is given.
2. You will be able to enter there after receiving a quest. The message will say that a prophet is needed.