Hi ninedaydecline, you're exactly right and on the right track for where to go. I pulled a rather cruel trick in this part in that, when you reach that section of forest where none of the directions seem to advance properly, there's another direction you've been "taught" not to go, but which is actually the correct path for that one screen/area of the forest maze.
In case that's confusing, the pattern through the repeating forest maze to find the old man is SEWN, where North is assumed heading up, South is heading down, etc. and it's the one where you're supposed to head West that is a bit of a cheesy trick on my part for players, since heading West on any of the other parts of that area takes you back out of the forest maze.