Spoiler

The waterproof blanket is in the smc, the caves to the north west of the map, by the river. Be careful there - the monsters get much tougher the higher level you are.

You could also to the puppy dog/tiny girl quest to get experience and weapons/spellbooks.

You can learn pickpocket from the master thief in bandittown, use it succesfully a score of times and then he will teach you other thiefy skills like detect/disarm traps.

The infinte dungeon (lower south east dungeon) is good to play in for a while.

after this is good to go throught the unreal dungeon (its downstairs from the smc)
There is usually a shop/altar/exciting vaults in these dungeons.

at the end of these dungeons you pop out in the high mountain village, theres a shop, a crazy doctor, a jail, and a couple of npc's.
over to thewest there are some secret stairs, these pop you out into the wilderness map on the other side of the river.

below you is the pyramid, the barbarians glade and darkforge, to the west is the mad Minstrel and the overgrown ruins (bug temple) and the caverns of chaos (the main dungeon)

futher beyond that is the tower of eternal flames and the gremlin caves - hidden in the forests is the quickling tree.

beyond the mountains ay the deep and confusing caverns of the minotaurs, the tomb of the high kings, the ancient stone circle and the forboding rift, in its depths is said to the the sinister library - with its ghost libraian.