how do you unlock the nightmares?
I think you need to finish the ToS questline first then you just have to sleep for a few days and you will get a nightmare... after that how to do the nightmares should all be written inside your journal.
If you've done the ToS questline already just spam sleep until you get the nightmare... that should do it as it is random % based.
Just like a mini rundown of what you might need to do (without spoilers). You have to warn the lizards about your nightmare and then you do some small quest for the lizards, then you have to sleep and someone will appear in your dreams and then repeat sleeping and you get a nightmare choice, which is followed up by the lizard celebration party at the waterfalls.
The Tavern of Spear crossover quest... It's the one with the misty abyss and the chief of the lizard's tribe from Tavern of Spear (I think his names is Nexaus. The actual name for the quest is called ''Between worlds''. I think it was added some time around v0.19. After finishing up that quest you have the nightmares.
You need to finish the lizard questline first. Then you have to look through the dark swamp until the character from ToS appears. When he appears you will be in a new area called ''Misty Abyss''. Then he will show up at the lizard's temple with his questline. (I don't want to spoil anything - personally I think it's well written and worth to go through)