Good question. I found the French instructions for the game. I don’t know French, so I might be wrong, correct me if I am.

In the English version, they’re described as “goblins,” but in the French version as “les Gobliiins” with a capital “G.” This might mean that the term refers to a nationality or a proper name for a team/organization. However, the word “Gobliiins” has three “i”s, one for each character, which could mean that it’s the name of their group.

In the second cutscene (also in the French version), Niak refers to the heroes as “gnomes” with a lowercase “g,” which could be interpreted as a derogatory term (since he is an evil sorcerer) or as the name of their species (since he is an educated man and knows what they are).
 
Judging by their appearance, aside from their height, they don’t differ much from humans. And if I had to guess, I’d say that gnomes resemble humans more than goblins.

   

We're back.

Interesting animal! I'd keep my distance. 

code: ICVGCGT

One of the short screens. However, it can be a little tricky.
According to the manual, the dog's name is Ragnarok.

BTW, why is there sugar on the ground?

The previous scene in the dungeon was entertaining. Pretty much everything there tried to hurt us, but the solution to the puzzle was somewhat obvious.

By contrast, I didn't quite understand what we are supposed to do on this scene with the dogthing.

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potential spoiler


I just picked up meat and walked back to the gates and I was given the code for the next scene.

Code: LQPCUJV

Attached Files

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@kamineko: I think that was it!

Not much of a puzzle, more of subverted expectation.

The tree puzzle was nice. It made sense (which means this game has corrupted my brain).

We might have a slightly different version of the game.

In mine:

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Spoiler
I need to wave the meat in front of the dog. But not close enough for it to bark at me. This shows the goblins that the dog doesn't want the meat (in the current form).

The current screen is another blast from the past. I remember racking my brains over this screen.
I think we've finally reached harder part of the game.

Oh wait, yeah, I had the experience as Joe and I read it the same way.

As an experiment,

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I tried just taking the meat and walking back to the gate - didn't work for me. I also tried to use the sugar on the meat and on Ragnarok. Oof!

Hm, it appears that in my version of the game waving the meat almost anywhere on the scene lets you pass to the next scene.

I thought it might be one of the ScummVM game enhancements, but the game is not on the list. Strange.

Anyway, back to the current scene, who would have thought that catching butterflies can be so dangerous.

Anyway, back to the current scene, who would have thought that catching butterflies can be so dangerous.

Butterflies are serious business!

   

Ragnarok, we meet again. This time, there's a bit more of a puzzle going on.

What happened to the sugar?

code: HNWVGKB

Is it just me, or does the head on the gate look like it belongs to the same species as a dog, but with horns? Maybe it's a male.

Anyway, another short screen. An probably the last easy one for a while.