Lighthouse Side Quest - Xenogears
The Lighthouse is an optional dungeon in Xenogears which you will get access to at the end of Disc 2 right before the final dungeon of the game. After all the story events happen in Disc 2 and you finally get to fly around the Yggdrasil again, this is one of the new spots that you can visit.
You can find the Lighthouse a tad bit northeast from Babel Tower. It's not marked on your map but you'll see it while flying over. Use my mini map in the picture below if you need to. For this dungeon it's strongly advised that you bring Emeralda with you. She has a lot of story events that happen here that you'll want to see.
When you enter the building you'll ride an elevator down into an underground city... Not what you are expecting when you enter a Lighthouse.. The city itself is pretty straight forward, if you see a building with a light on it means you can get out of your Gears and go inside for a treasure. Every time you get near a building with the lights on Fei will make a comment about being able to go inside. You can find a DeathBlower1, DeathBlower2, DeathBlower3, Survival Tent and G-Godfather in this part of the city. The G-Godfather is the most important since it's the best in slot Weapon for Billy's Gear.
You can find the G-Godfather item south of Joe's Shop which is in the eastern part of this city. If you remember Joe he's been in a few places throughout the game, well for the first time he's finally extremely useful because he sells the best items in the entire game. His shop also has a weird quirk with respawning chests.
Basically, every time you enter Joe's Shop the chests around him will respawn, there are 16 items in total you can collect from these chests. As far as I am aware these chests respawn every single time you enter/exit the building--even after you've opened 16.
Joe not only sells the best Gear parts, he also sells STR Drive, VIT Drive and all the other permanent stat boosting items with drive in their name. These cost 10k each so you probably can't buy too many... but it's good to know that they're sold here.
Tip: The Engines that Joe sells may not be to your liking since they will slash your Fuel down to 1,000 which is barely enough to do anything. The Snowfield Hideout Engines are better in this regard since they have an 8000 Fuel capacity.
Aside from Joe and the items mentioned above, there is one last thing for us to do in the 'Lighthouse' and that's to trigger the scenes with Emeralda. Further east of Joe's Shop you'll find a large parking lot, in the southwestern portion of this parking lot you'll find a lump on the ground. Just like with the buildings, Fei will comment that if you get out of your Gears here you can probably go inside.
Inside the hole you'll find a linear path which leads you to a train station. Search inside the abandoned train for a Z Charger item and then continue up the stairs to reach an area where you'll get a scene with Emeralda. When the scene is finished, your Emeralda will evolve into an Adult Emeralda (pictured below).
Emeralda evolved into adult Emeralda!
That's all there is to do inside of the Lighthouse, once you evolve Emeralda you're free to leave. One tip/note about Emeralda, if you picked up the Mermaid Tear item from earlier in the game you can trade it to the man in the prison area of Snowfield Hideout for a Mermaid Ring. This ring can only be used by Emeralda.
Return to Xenogears Walkthrough (Chapter 5)