You cannot fast-travel for now so head back inside Cartman's House to trigger a scene. You'll be inside the Giggling Donkey. After the cutscene, in the basement, follow the straightforward path until you encounter the Bard. You'll now have to fight his elves while he buffs them up with songs.
After defeating them, equip the new magic Cartman taught you and use Cup-a-Spell to blast the barricade along your path. Craig will tap on the window so shoot it open. He'll get injured as he makes his way inside so order Butters to heal him. You can use your Cup-A-Spell again to blast the enemy beside the lamp and also inflict them with status ailments before engaging them to battle. After defeating them, leave the basement.
Head to the kitchen and shoot the bulb overhead to knock out one of the enemies. Engage the others and defeat them to rescue Cartman. Once done, have Butters heal him as well (or just attack him to make him suffer a bit more)
Go to the living room and shoot the lamp to take out one enemy. Now stand in front of the candle and use your Dragonshout to clear the obstacles. Continue to the right and shoot the lamp in front of the door to expose the fire. Now use Cup-a-Spell to blast it open.
Engage the next enemies. Be careful of the Elven Anti-magician since he can remove his debuffs and attack with a devastating combo. After defeating him, loot the bodies and go upstairs. Once in the second floor, check the drawer to get Jimmy's Garage Key.
Enter the room to find Princess Kenny. Loot the items from the drawers first then shoot the support of the higher shelf to create a ramp. Next, shoot the décor to make it a ladder that you can climb then shoot the lamp hanging over the bed. Next, slide down the wire to knock out the captor and save the princess.
Free Kenny then leave the room. You can now use him again as a buddy. Order him to lure the elf on the attic. Loot the knocked out elf then climb the ladder to reach the attic. There are only two enemies which you can take out by well placed Cup-a-Spell attacks. Once cleared, shoot down the rack with the chest on it to create a hole on the floor and into the bard's room. Once inside, you'll have to fight Jimmy and his summoned rats.
Take out his rats first then attack him. It will be better if you can inflict multiple status ailments on him, like Burning and Grossed Out. Don't hesitate to use items as necessary since you don't lose a turn when you're healing yourself this way. Stop him from using Brown Note by stunning him. Butters is preferably the better partner here since he can deliver decent damage for perfect hits. Once Jimmy's defeated, loot the items from his room and his body then talk to Cartman to return to the Keep. The quest will be complete.