can anyone give me a few pointers?
The start of Ep4? Explore, for starters. It will give you a sense of your objectives.
Start with exploring everything in the Castle and the Town again, you will find some things new.
Interact with just about everything you think may have changed. Try talking with everyone.
Then you will start getting some objectives.
Once you think you;re done everything in Town for now (talked to everyone etc), go to other Islands and explore them, they will also nudge you in what you must accomplish.
And you;ll be on your way, most of the detailed hints are here.
Such as the people in town trying to get the balloon going?
Yup. Also talk to the other person there until; she drops a hint.