The Gnome's Island is surrounded by fast moving water on all sides. There are three bridges onto the island, and all are guarded by a big Troll. The Troll wants a trade to get onto the island, and he'll take just about anything valuable. If you pay him, you are allowed safe passage across the bridge, but just that time. The next time you want to cross, you have to give him something else.
Rather than having to pay the Troll each time you want on or off the island, it's better to eliminate him from guarding the bridge all together. (After all, you're not the only person in Daventry—maybe someone else will want to cross one day). So, to do you and everyone else a favor, get ride of the Troll. This can be done by getting the goat to follow you to one of the bridges guarded by the troll. When you begin to cross the bridge, the Troll will come out to demand payment. However, when you goat sees the Troll, he'll immediately butt him into the water. That will be the last you will have to deal with the Troll in the game.
Only after you make it past the troll can you visit the Gnome in the center of the island. He is busy wheedling something and is sitting next to a spinning wheel that looks like he's been turning hay into gold.
If you remember your Fairy Tales, there was another gnome that spun hay into gold—the Gnome from the story Rumplestiltskin. The spinning wheel is your clue to what happens next.
If you talk to the Gnome, he will want you to try and guess his name and he will give you three tries. He'll make it worth your while whether you guess his name or not.
The Gnome's name is not Rumplestiltskin, although if you guessed that, he will tell you that you are close. Another hint, a note that can be found in the Witch's House, tells you to that it is sometimes wise to think backward. Apply that here and you will come up with the Gnome's real name—Nikstlitselpmur, which is Rumplestiltskin spelled backward. It's a good idea to write this down as it is a tough word to type from memory.
Your reward for guessing the Gnome's name are some magic beans. Remembering Fairy Tales is helpful, and you may recall Jack and the Beanstalk and what magic beans are good for. Planting the beans and growing a beanstalk is your gateway to the Gaint's Cloudland.
If you do not guess the Gnome's name after three attempts, he will give you a key instead of the magic beans. The key will open the door in the side of the mountain (E7). This will also you passage to the Gaint's Cloudland, although you get a little less experience points for solving the game with this method.