1. indeed
2. like Moni said. You have to dive into a vertical shaft to get there. Look for precise maps at
www.volberding.com
3. I'm afraid the No Dachi will be gone, even if you could find the place you left it. Only items vital to the main quest are preserved, and (since the patch) the Colanth eye.
Radek: you get the story about paladin-hood, but after that whole story is finished, he should also check if you've finished the Mon the Schulz quest. If you don't have the patch installed, and walk out before the guild master finished talking, you might very well miss the reward. With the patch I've never lost quests, even when I did have several at the same time.