Moonstones unlock the amount of weaponry the Grandmaster Swordsmith living in the caves beneath the castle in the Capital of Egypt can produce. For every 4 stones, new items will become available for sale. The moonstones are not consumed throughout this, they merely unlock the options.
The Grandmaster Swordsmith can be found post-game, when the large rock at the beach in Egypt vanished. He will inform you that he is retired, not commissioning any more weapons. You'll need to convice him otherwise.
First, when you are visiting the castle in Egypt for the first time, a soldier in the guards' quarters will give you the mission to stop some deserters at the beach. They will drop the a sword called "worthless piece of shit" once defeated. You can obtain a shield with a similar name later in the game.
Second, in the village on top of Mount Hades, in the rearmost building on top of the cliff, a former disciple of the Grandmaster lives. He will recognize the sword as the Grandmaster long lost one, and tell you to show it to him.
Finally, when you meet the Grandmaster in Hell Dune (below the castle) he will offer to build weapons in exchange for his old sword. The weapons are made of comet pieces and are the most powerful items sold in the game. The second most powerful ones are the royal items, sold in Wintero.
The first four moonstones unlock: Moon Sword, Moon Spear, Moon Axe
The second four moonstones unlock: Moon Crossbow, Moon Mace, Moon Rod
The locations of the moonstones are:
- in chest in crystal ritual chamber beneath the dungeons.
- in chest at the end of the cave that leads to mount falcon.
- in a chest in the bandit cave (mount falcon), on a small island.
- in a chest right before the bridge leading across to the tower of hades.
- in chest right before stairs down in the pharoah's tomb (to the final fight with osira).
- in chest at entrance to treasure chest game, festival islan.
- in a chest in the hell dune large cave. from the cave entrance blocked by a rock, south of outpost.
- in a chest in the bandit fortress. after the dialogue with rughart. west wing.
- in a chest in wintero, two screens east of the village hidden in the NW part.
- in a chest in wintero, in a cave one screen east of the legendary krona.
- in a chest in the ice caves beneath the cabin and cemetery in wintero.
- in a chest in the cave on monster cove.
- in a chest near the portal door at dead rock.
- in a chest along the cliffs south and east of the beach (one screen east of the fork).