You will find the pastword for this one in the Gallopolis Region, by the southern campfire. There will be a red tockle there, so simply speak to it to get the pastword needed to unlock this.
Upon choosing the Moonahan option at the Altar of the Legendary Line, you will warp to the town and notice that all of the people have been turned into dogs, except for one person. Speak to this person and she will mention about her curse, as well as how it seemed her curse turned everyone in Moonahan into dogs. In order to break the curse on the town, she would need a Magic Water, so accept the Curing the Curse of the Curs quest from the Princess of Moonbrooke. If you’ve been looting every place up to this point, then you should have gotten two Magic Waters in the Kingsbarrow dungeon. You can also loot one in Gondolia, whenever you get there in the main story.
If you wish to do some farming for a Magic Water, the Prestidigitator enemy has it as the rare drop, so it could be a while in order for you to get one. Fortunately, the Ancient Ruins area in the northern section of the Gallopolis Region has a bunch of those enemies standing around it. Once you have gotten a hold of a single Magic Water, return it to the NPC in Moonahan to finish the quest and receive a Devil’s Tail accessory.