Once you've completed Colosso, speak to Babi about his desire to go back to Lemuria to get more Mystic Draught. Now, I'm not entirely sure why Isaac chooses to help a vain old man, but...well...hero stuff...
Anyway, after mentioning that Isaac has to stop Felix at the Venus Lighthouse, Iodem agrees to go to Lalivero with Isaac. But before departing that way, go to Babi's room and take the Cloak Ball.
Now return to Lunpa for a sidequest.
