Did you try casting Aura of Command on Iona's death knight? That will turn the ones that Josephine summons to fight on your side, at least (presumably it wouldn't work if it isn't a summon).
Hell Spikes isn't very effective before level 4 or 5.
Have you cleared the wastelands? You could put off the boss fights and clear the rest of the Black Ring dungeon area first, to see if that gets you up another level (average end level range is from the mid 40s to the low 50s).
While you are doing that, you can periodically check back with Kroxy to see if he has any equipment upgrades or spell books, etc. There is the trader at the start of the wastelands, as well, though more expensive (IIRC gold charms were twice as much); you probably have plenty of gold, though.
