Uh, Asmund (the headless knight) drops the knight badge and iron key.
The key is needed to open that door in the west wing (left part) of the main floor (stop 35 on the map in my guide).
That badge is the first one you can obtain of three (two can be used to free Bread and all three have their use with the cloaked ferryman), but only one is required for that jester ghost to proceed. Now, since you mentioned an underground city, but this all happens in the castle, have you given the knight badge to the jester? The one you give him is gone forever, so you need to find the prince badge to free Bread (or load a previous save and give him the jester badge you find after the knight one).
I do recommend getting all three, show the ferryman the jester one for some extra coins (and maybe early gargoyle farming for 3 mosses, if you don't have enough for the moss bracelet from Chet), knight badge just to mine the daily blood crystals if you want, and give the jester badge away to proceed.
The boss also is easier (halved HP) if you keep and show the knight badge, while the prince badge skips the fight and changes the reward to a +1 CHA equip instead that can be traded whenever way later in the game (but i am keeping it).
I got the Jester Badge first and immediately showed it to the jester but i didn't go fight that lion boss instead i continued exploring and i went EVERYWHERE except stop 35 cause i killed asmund but never got the badge nor key. So you're right i have to go reload my save point before i entered the cave unfortunately.
Thanks for the reply
maybe you are misremembering and are thinking of that "scream" sequence, not the actual fight with him, would test more with the save.
i actually just tested doing what you did though, and i found out asmund's "!" stop in the prison vanishes if you do king harald's boss fight, sooo... the only explanation is you have 7 (or more) AGI, which secretly unlocks the stops in the top left of the main floor early, got the jester badge there, gave it to the jester, fought harald and missed out on the actual asmund fight, which gives the knight badge and the key to access the way to the last optional fight and prince badge.
i am not sure it is intended, see if that is what happened.
