The hidden storage room is in the cell diagonally opposite the prisoner, to the left of a cell with a busted door (check the map and it should be obvious which wall section inside is movable), where you can find a couple kegs of explosives (one to clear the cave-in and another to open a short passage a little after that). Specifically,
To get to the hidden storage room, there are a couple vertical wooden beams at the back of the cell, with a button on the left beam. After that there is another button (on the right IIRC) to remove another false wall. The two small kegs of explosives inside are on a table, IIRC, and there is a bit of loot to collect.
I obviously registered bc i have lots of questions myself, i used the second explosive barrel for that little passage where i obtained a key. Unfortunately im not sure bc i already had one key from broken valley in my inventory but i think i never figured it out what that key opens, unless it was the key that opened my way to the library with that goblin ?
The key in the side passage opens a chest on the third floor (you can light both candles on that floor...). The key for the second floor door (Erlking's library) was carried by an abomination master in the basement.