Go back to the magical shop in the first town (note: not the school). Talk to the witch who you saw at the beginning scene. She will tell you to go south. Now go south. You should have the item necessary to extinguish the fire. Keep going until you are in a military camp. Go inside and go upstair. Talk to the man with a suit (?) to fight the camp captain. Lose to get a h scene, win to get a permission slip. With the permission slip you can now go south into the mine. Go through the cave to end up in a slum (actually a mining camp that has been abandoned.) Also, somewhere during this journey you should encounter a damsel in distress. Save her to get a black membership card. You will need this to proceed the story.
Once you are at the slum, go to the pub and talk to the bartender. He will recognise your membership card and tell you to investigate the spot on the wall. Do that to end up in a secret corridor. Here you will find the woman you saved. She will tell you to get 10 ancient gold coins to trade for the stolen spell book. You have two choices here - either go look for the gold coin scattered around town, or go to the left and buy them from the merchant the end of the secret corridor. Once you do you can get the book back. At this point a nun will show up and tell you to visit the magical academy headquarters, which is West of the starting town.
From here onwards it's a straight shot. Go through the desert to find the academy. Find the nun again and she will tell you to go north of the main town, where you will final the final dungeon and the final boss.
Note that there seem to be more than one endings. My character has zero decency, and I ended up with a bad ending.