1. Finish all 13 dungeons at least once.
2. Get the unknown element from the Desert.
By solving this riddle3. Make sure the river is flowing again (activate the pump flowers in the Veo Lu Sluice).
Having done this all you will be able to walk through the final miasma stream leading to "Mag Well" and the end stage "Mount Vellenge".
The riddle to get the unknown element is told by Gurdy who upon encounters will sometimes tell a rhyme which, when puts together, forms the clues to solving the desert puzzle.
The part below contains some spoilers about the story.
The black knight himself is nothing more than a story figure. Remember the story that the vilage elders tell whenever you start with a new year. About a boy who journeyed the land for a way to rid the world of the miasma stream, but who never returned home. That boy was Hurdy and his companion was the black knight. They actually found the cause of the miasma, but when they confronted the evil they lost there memories of who they once where.