This article is from the Final-Fantasy and other Square Soft Games FAQ, by email@example.com (Nick Zitzmann) with numerous contributions by others.
Go to the weaponsmith's house on the peninsula near the Gold Saucer and
talk to him. He'll tell you that you need the Keystone, which he gave to
Dio. So, return to the Gold Saucer by means of North Corel. Go to the
Battle Square and examine the Keystone atop the pillar in Dio's Show
Room. Dio will appear. Accept his offer to fight in the Battle Square.
While you'll get bonus items for winning lots of battles, you can lose
even the first battle and he'll still give you the Keystone. From there,
go to the Ancient Temple in the Woodland Area island to continue your