Darm's house is right near the cave's exit. When you talk to him, he seems a bit off key but is otherwise willing to help and asks you to bring him a quill. While exploring Timbermist Woods in search of the quill, you will find many gems. These may come in handy later so you may want to pick a few up. East of Darm's shack, you will find a songbird but it doesn't seem ready to relinquish a quill just yet. Beneath the songbird you can find a walnut which will come in handy.
The Timbermist Woods has its share of dangers. One may be tempted to pick a gem from the ruby tree but a poisonous snake will bite you if you try it. If you don't have the yellow gem activated on Brandon's amulet for healing, he will eventually die from the poison. Far in the southeast part of the woods you will find the Serpent's Grotto. When you try to enter, Malcolm will show up to taunt Brandon. When he throws the knife at Brandon, quickly click on it while it is stuck in the tree to throw it back. If you try to run, Malcolm will throw another and won't miss this time. Malcolm will leave and seal the entrance to the grotto behind him in ice.
South of Darm's shack, you will find the Deadwood Glade which has a large hole in the ground. Perhaps something could be planted there to restore life to the glade? Collect the walnut at the Songbird's Nest, the pinecone west of the oldest tree in Kyrandia (with Old Nolby sitting under it) and an acorn to the northwest of the pinecone. Drop these 3 items in the hole at Deadwood Glade.
The plant that sprouts forward will thank you for restoring life to the Deadwood Glade and activate the yellow gem on Brandon's amulet. This allows you to use a healing spell. Using it on the injured songbird will get you a quill to bring back to Darm. After giving him the quill, Darm will write a scroll that will help you later.
You must now collect the birthstones and place them in order on the plate at the Marble Altar. If the correct stone is used, a gem will light up. You must activate all 4 gems in order to complete this quest. The stone order is random for every game but the first stone is always the Sunstone which can be found at the bubbling spring to the east.
The best method for placing the stones is to save first and then reload once you have placed the correct stone. This way you won't burn up all of the stones trying to find the correct one. The last gemstone is always the same: the Ruby from the ruby tree to the northwest. Just make sure you heal if you are bitten! If you are having trouble finding the correct second and third gems, you can go back and look on the other side of the cave too. The golden dish morphs into a golden flute. One of the high notes will surely be able to crack the ice blocking Serpent's Grotto!
Summary
Talk to Darm
Bring the walnut, acorn and pinecone to the Deadwood glade to activate the yellow gem
Deal with Malcolm at Serpent's Grotto
Heal the songbird's wing to get the quill
Bring the quill to Darm and he will give you a scroll and the birthstones quest
Put the Sunstone on the golden plate at the Marble Altar
Use trial and error to determine the second and third stones
Place the ruby as the fourth and final stone
Use the flute to shatter the ice at Serpent's Grotto