The room with the fountain-like thing in the middle with the many rooms up some stairs, there is a chest under the stairs that will be locked. Upon walking into the room, go up the right stairs and into the room on the right of that. It is the most right room there. There is a book on the shelf that will open the room to reveal a phial of blood, the key to the chest, and another chest which has a password. But, how the chest has a password is beyond my knowledge. Grab the key and the phial then go to the chest under the stairs and you will find the book there. Any further gameplay beyond this point is a mystery to me for I was simply looking how to get past this part myself and had to make sure the best explanation was given for future gamers to view. Thank you and have a nice day.

Update: The second book is obtained after you give the first one to Larian.. er, I mean the Librarian. Then, end quest and awards! ^-^ But, the dragon scale is across the bridge. All you gotta do is jump and evade and hope he doesn't hit you. Then... Christmas jump icon?