I just got past the starting area, and explored around a bit, but I have no idea what to do first. I have the
Spoiler
torch w/ straw on the table
but what now?
You need to:
Spoiler
Switch to Psychopomp and go upstairs to the room with the cage/waterwheel. There is a loose brick in the red brick chimney to the right, try removing the brick and then flip the pipe on the water-wheel to make water run down the chimney.
Hope it helps!