This is part of a first-playthrough guide using the Dragon story arc. It covers both the original PSX version and the 2021 HD remaster, though some place and item names differ slightly in the latter. You can find an overview of the Dragon% path here.
The Quick Version
Place the Green Cane Artifact to create the White Forest. Enter the forest with Larc and use his scent-tracking abilities to find the third and final Dragon of Knowledge. Receive the Torch of Coral Artifact after a boss fight.
The Details (May Contain Spoilers)
If you don’t have the patience for Larc’s guessing game, here’s the path from the entrance of the forest:
Lower left (“We’re closing in …”)
Whether or not you agree to help Vadise, you will have to fight her and Sierra in a boss battle. Sierra is basically the same as in her Bone Fortress fight from The Ghost of Nemesis; Vadise has a smaller health pool and doesn’t do much except occasionally cast AoEs. Whittle down Vadise first while Sierra is distracted by the pet, just to get rid of the AoE spell distraction. Then go after Sierra, trying to spend as little time as possible directly in front of her (and thus in reach of her forward dash attack).