Just dropping the stardust herb will not trigger the weresheep; you need to throw the herb, or move it on the ground after dropping it. Leaving the Phantom Forest and returning shortly after should also work, but there is a known issue where dropping the herb, leaving and not returning for some time will break that quest (the person who reported that had a save an hour earlier, where it worked properly).
If moving/throwing the herb, or leaving the Phantom Forest and returning, doesn't help, try previous saves, if available.
Hopefully you will at least have an old save where this will work, but if not there is an an honour mode speedrun guide on Steam
which could be useful in skipping through the early game. However, I'm not sure if it relies on any exploits that are specific to the mouse and keyboard UI (it does require specific character builds).