Thank you so much! I came back as Smith (thinking it was a quest specific to him) and spent hours and hours trying to figure out what I missed - of course it was the old "I checked this area out once at the start of the game and forgot it existed" problem :)
And yes, I did understand how the shortage was affecting them. It was a big hint, and I can't believe I missed it! I thought that because the sprawling forest was magical, it probably wasn't a good idea to try to get magical wood, but Jack seemed to know about forests in general so maybe he'd know where to get a small scrap of regular wood.
Anyway, now I'm going back to experience all of the endings. Thanks again!