When I finally got to Erathsmedor, I found that the Shroud of Elsera was missing from my inventory! I don't remember selling it, but I checked all the shops with little results. I went back to D'Soto, even though he would talk to me, still no Shroud. I have no saved game with the Shroud. Is there anyway I can still continue?
Desperate

Oops.
This is one of the nastier shortcomings of the game: you can loose vital puzzle items.
One possibility: have you been in a city lately? Otherwise 'revert game' in the inn might restore a situation in which you still have the shroud. (It's sort of an autosave.)
Next possibility: 'reset adventures' under game options resets all puzzles, but keeps your party members. Then you can run through the first part of the adventure very quick. (Still a lot of work, but less then starting all over with a new party.)
Finally you might try to find someone who can email you a save file that is close to where you are. (But then you have a different party obviously).
Good luck