I suggest like Raze that you take time to fully explore Broken Valley and do everything it has to offer so you will be in the correct lvl range, which is about 15 for this part of the game.
As for the keys, you need 3 of them to open the chest for the book and they are all found in certain bedrooms in this part of the Maxos Temple. I don't know their exact locations, but they are there!
The Phial of Blood is located within Amdusias bedroom where you need to activate the book on the end of the bookcase to reveal a secret place which houses the Phial of Blood and a key.
After you unlock the chest and get the book, take it back to the Librarian and ask him for the second copy. Read it and then continue on towards the Blood Alter.
The Dragon Scale is located towards the Blood Alter which means, yes you have to face Amdusias' Dragon Form. It's best to either summon an ally or have your creature distract him while you run to get the Dragon Scale. Have potions on hotkeys however you decide to do it, because you WILL NEED THEM. Even more so since you are about 3 lvls too low, which means you already suffer from low Hp. As soon as you grab the Dragon Scale, open your inven, read the book AGAIN and Amdusias will turn into a human. After brief dialogue he attacks you. Be careful because he has strong magic. I was lvl 18 when I did this part and one spell took 25% off my Hp with around 30 Vit on my Warrior. He also has a spell that controls your body to move it away from his (Like Fear does.) Goodluck!
Afterwards, you will unlock the gate to go lower into the Tombs and you will have to fight 2 more guard type things Damien summons. Then you will be free to go to Sentinel Island.
