Talk to the guy to hear some more about the plot and go right. Take all the goodies and enter the house here and talk to the man. He'll give you a sword, which will make fighting the slimes a lot easier. Go right and save if you want to. Down are some more goodies, get them, come back and go down the stairs. (Why stairs in the ground, I've always wondered?) Even more goodies in this cave, pick 'em up and head down-right. You'll see a huge slime here, kill it (shouldn't be too hard) and go back out. Right again and talk to the knight if you want more plot info. Then down again and save if you want to. Down the stairs, pick up all the goodies in this cave again and head down. There should be a save machine here, last chance to save if you want to, so do so. The boss shouldn't be too hard, but he does hit quite hard.

P.S.: That was my headbutt joke! :)

Update: P.P.S.: It seems we both thought of the same joke (with groin-knee difference) - Don't we have great sense of humor?