After you read the mute goblin Erlking's mind, you can read the book he was thinking of on the other side of the room (entering the room, his bookcase is on the right at the far back).
Once you have the demon's name, finish everything off that you want to do in Broken Valley (you can wait to rescue those in the quarry tower) and Sentinel Island (except the quest you need to be able to fly to complete) before proceeding further in the battle tower.
