You are on the right track! Once you reach the Hydro Plant, Bilbi and Isu appear there. Bilbi is the guy with the shotgun. The character who mentions the Earth Spire in the base is actually a different character and the king can be found elsewhere.
There's an explosive wall to the left of the extra. If you ride the moving platform and shoot to the right a bunch of times that's where the hidden path is. It was a little small, so I made it bigger and easier to shoot at.
