Let's first do some treasure hunting before we advance the story.
Go to the northeastern part of town and use the stairs to go along the river.
At the end, you'll find an Elixir chest. Do not use the Elixir you find . We're saving it so we can hit a treasure trove.
Where is said trove? Go into the northwestern house where Cid lives. Speak with him, then use the Elixir on Mrs. Cid to cure her.
Afterwards, zoom in and examine the sparkly lamp to open a secret passage .
In this secret area, you'll find a nice few items: a Potion , three Phoenix Downs , a Gold Needle , two Gnomish Breads , one Blind spell, the Great Bow , and an Iron Arrow . Go east through the southeastern corner to find two more chests, each containing 2,000 Gil !
Go into the house that is connected to the Inn to find a Gold Needle and a Mallet . Now it's time to advance the plot some.