The party went back down the tunnel beneath Rosedale towards the mind flayer city. Just before reaching the elevator, they discovered a newly constructed set of iron doors blocking the passageway. Glebo cast a silence spell and Tzurak stealthed up and picked the lock on the doors. On the opposite side of the doors the group discovered the elevator as before.
Brace took the form of a bat and went to fly down the shaft, but immediately spotted a new alcove in the cliff wall occupied by a red dragon. This dragon attacked the group and was slain, but not before displaying an ability to cast a quickened true strike in some odd way.
Brace scouted the mind flayer city again in the form of a bat. He spotted some warehouses that were previously undiscovered. He also discovered where the channel let out.
A commune was cast by the party, revealing that a crew could be found in the city if freed from the mind flayers, that the mind flayers had a mechanism to control the draining and filling of the channel, and that this mechanism was not within the city. They also learned that the ship didn’t have magic that would allow it to be piloted without a crew.
The group came into the city through the back door by water walking up the underground river. Tzurak did a little more scouting, learning that the black channel seemed to disintegrate whatever it touched, that one of the warehouses was guarded by two mind flayers and had people packed inside like chattel, and that a large tower was in the city opposite the waterfall. He stone shaped a hole in the top of the tower and was nearly fatally mauled by an enormous air elemental before managing to trap it in the tower once more.