Hi, I'm sorry you found this frustrating. I hope you were able to move forward in the mean time using the solution provided in the manual, but I am happy to explain the logic behind it. (Spoilers below, for anyone else reading.)
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The first clue (found in Clocksworth's study) is "The path of the travelers leads to higher ground," meaning that you're meant to trace the route that the travelers took and orient the statues accordingly. You don't have to move the statues in a specific order, but the direction of their travels informs the clues, and it's easiest to work them in that order.
So, where do we start? All of the clues reference multiple travelers except one: "The dryad left home to visit her friend, the sprite." Therefore, we know that the dryad started out alone before being joined by the others, so we'll start with her. The sprite statue is east of the dryad, so we know the dryad is traveling east - so, we turn the dryad statue to the east.
The next one is probably the trickiest part. There are two travelers at this point (the dryad and the sprite), standing at the sprite's location, and there are two clues that reference two travelers: "The crocodile chased two travelers beyond the castle grounds" and "The jester joined two travelers who were heading to the city." All other clues reference three travelers, so we ignore those for now. Note that the crocodile is immediately south of the sprite, whereas the jester is all the way in the southwest corner. Because of the clue "The gargoyle greeted three travelers as they arrived at the castle," we know that the gargoyle represents the castle. The gargoyle is one position west of the crocodile, whereas the jester is two positions west of the crocodile. There is no clue that explicitly mentions what the dryad and sprite did after meeting up, but we know that only two travelers encountered the crocodile. Between this and the fact that there is nothing east or north of the sprite, we can conclude that they traveled south to the crocodile from the sprite's location, so we turn the sprite to the south. We also know that the crocodile chased the two all the west, beyond the castle, so we turn the crocodile west. Because the travelers went beyond the castle, and because the gargoyle met three travelers and the jester met only two, we leave the gargoyle for later and move on to the jester.
The jester's clue is "The jester joined two travelers who were heading to the city." From the clue "The soldier shielded his eyes from the sun as he watched three travelers depart the city," we know that the soldier represents the city, and the soldier is two positions north of the jester. Since we know that the jester is headed to the city, we turn the jester north. At this point, the travelers are the dryad, the sprite, and the jester. All of the remaining clues reference only three travelers, so no one else will be joining them.
Next, the soldier. Since he is shielding his eyes from the sun while watching the travelers, we can assume (based on Earth logic, at least) that the travelers are headed either east or west - towards either the sunrise or sunset. Since there's only a wall to the west, we know that the travelers aren't going that way, and so we turn the soldier to the east, towards the merchant.
The next clue is "The merchant turned away from three travelers as they crossed the empty field." The merchant is the north center statue, and the empty field refers to the empty space in the center of the room (we also know that the only remaining clue indicates that the travelers at some point went to the castle, which is directly south of the merchant at the gargoyle's location). To cross the field, the travelers must head south, so we turn the merchant in the opposite direction - north.
The final clue is "The gargoyle greeted three travelers as they arrived at the castle." Based on the merchant's clue, we know that the travelers are arriving from the north. To greet them, the gargoyle must therefore be facing north.
The final path of the travelers looks something like this:
5 -> 6 | | 1 -- | -> 2 | | | 4 <- 7 -- 3
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I hope this helps you make sense of the solution.