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You'll likely come here a total of three times before you head off into the Swamp in search of the missing student. The first time will be after you talk with Master Li for the first time and find out about the bandit trouble, and come in search of a weapon. The second time will be if you're on Kia Min's quest for a herbal cure. Your third and final trip here will be after the Spirit Cave on your way to the Swamp after finding out about the missing student. The areas of interest are the main square where you'll do some fighting multiple times, Gujin's weapon shop, the southern open area, and the beach.
1 - Arrival
On your first arrival here in the village, you'll witness two bandits attacking one of the villagers (Ni Joh's father, as you'll learn later). When their victim falls, they'll turn their attention on you. The battle is about as simple as possible, so just crush them both and continue on.
Later, after visiting Gujin and obtaining your weapon, you'll have to deal with several more bandits in this location. And, finally, once you've emerged from the Spirit Cave and are searching for Dawn Star, you'll discover the charred remains of student Si Pat at this location. The nearby witnesses will tell you that Gao the Lesser was carrying a sack and headed toward the exit to the Swamp (area #14).
2 - Bandit Attack
Once you've obtained your weapon from Gujin, you'll discover three bandits and a bandit lieutenant attacking a lone villager. When they've been dealt with, the villager will run off to the north. You'll soon realize that he left without his chest, so plunder it for the 200 silver pieces that it contains. You'll eventually be approached by the villager about this money for an Open Palm/Closed Fist opportunity, so you might not want to spend it if you're building a righteous character.
There's also a bamboo cask that can be looted for 25 silver while you're here.
3 - Fen Do
Fen Do is the village's only merchant, though he won't be available until after you've dealt with the ship at area #7. Even then, he doesn't offer anything for sale and is only of use during the Kia Min wound quest. Depending on whether you seek Open Palm or Closed Fist points, you can purchase a Red Silk Grass Poultice for 50 silver (40 silver with a successful dialogue check) or a Bearded Tongue Grass Poultice for 25 silver (20 silver with a successful dialogue check).
Once you have visited the Spirit Cave and have obtained your Dragon Amulet, Fen Do will have received a shipment of goods and can sell you various essence gems (such as a Flawed Scholar Gem and an Inferior Charm Gem).
4 - Gujin the Weapon Master
When you first talk to Gujin, you'll get one of two outcomes as a choice for a weapon. Those who have the Xbox Limited Edition of the game will get the Fortune's Favorite longsword or Tien's Justice staff as options, and those with the Xbox regular edition or PC version will get to choose between Fortune's Favorite and the Golden Star staff. The staff has a longer range but is a little more difficult to use effectively due to its slower speed. The sword is a good choice for first timers but either is a viable option. He even gives you the chance to try one and return it if you don't like it (while you're still in Two Rivers, anyway), so you really can't lose. And, should you find that you don't like your choice after you've left Two Rivers, don't worry. You'll have the option to pick up the alternative weapon later in the game anyway.
At the end of your conversation with Gujin, you are interrupted by a messenger with news of the bandit's recent landing on the beach (area #6). There are a few other opportunities for you here in the village now that you've obtained your weapon, though, so you'll probably want to do some exploring prior to heading off to the beach.
Before leaving Gujin's hut, read the The Martial Arts scrollstand. If you've read all other scrollstands and bookstands up to this point, you will receive the Legacy of Master Li technique. You'll also discover a Focus Shrine here in Gujin's hut, so feel free to return to it at any time to replenish all of your Focus points.
5 - Bamboo Cask
Open this cask to uncover 5 silver pieces.
6 - Bandits / Villager
After you've acquired your weapon from Gujin, two bandits await you here. Take this opportunity to test out your new weapon.
When you return to this location during your pursuit of Gao the Lesser for kidnapping Dawn Star, you'll be approached by the villager whose chest you may have looted earlier at area #2. If you offer to return the silver and then turn down his offer of allowing you to keep half of the money, you'll earn points toward the Open Palm. If you refuse to give the money back or intimidate the villager into believing that you never saw his chset, you'll earn points toward the Closed Fist.
7 - Beach Attack
After you've acquired your weapon from Gujin, you'll need to visit this stretch of beach to address the bandit situation. A large ship has docked just off the coast here and you'll be forced to fight off two waves of bandits as they try to storm the beach (while the ship fires its cannons at you!). When all eight bandits and the bandit leader have been crushed, the assassin captain will summon three ghosts for you to deal with.
When the spirits have been destroyed as well, the captain will teleport himself to the beach and applaud your battle prowess. He realizes that something must be hidden in such a well-protected village, and proclaims that he will "tear it asunder" to claim whatever it is for himself. Before he can do anything else, Master Li will run to the beach and destroy the assassin's ship with a single devastating blow. The assassin seems to think that your master is someone that "they" have been searching for, but Li snaps his neck before he can notify anyone of his success. He then tells you to see to your fellow villagers and students for any help they may need, and then return to him at the school where he'll tell you more about the events that have tranpspired and what role you are to play.
Once Master Li has left, Dawn Star will strike up a conversation about the spirits you dealt with and what an attack by such an assassin could mean for the village. Remember, if you're looking for a romance with Dawn Star, you should be kind to her during this and future conversations.
8 - Old Ming
Old Ming tends to the statue of Emperor Sun here on the beach. He's also quite familiar with rare herbs and is able to tell you about two different herbs that will work to cure Kia Min's wound at the Two Rivers School. He explains that you'll want to give her a Red Silk Grass Poultice rather than a Bearded Tongue Grass Poultice, as the former is actually a curative whereas the latter simply numbs the pain. This information is worth 10 experience points and provides you with yet another chance to move up or down the Open Palm/Closed Fist spectrum.
9 - Ni Joh
When the ship has been dealt with at area #7, a man named Ni Joh will inquire about his father. Unfortunately, you witnessed his father being struck down by the bandits when you first arrived here in the village. If you feed him the "the weak fall as they should" line, you can earn some Closed Fist points. The other well-mannered answer won't earn you Open Palm points, though.
10 - Mrs. Jong / Villager
When the ship has been dealt with at area #7, a woman will ask to speak to Dawn Star here. Apparently Dawn Star has spoken to her dead son's ghost and the woman wants to apologize for her earlier claim that Dawn Star is simply conjuring up spirits. Aside from a little background information on Dawn Star's inherent gift, there's nothing else to be gained here.
Later, you'll encounter a nervous villager standing near this entry point. If you inquire about why he's nervous, he'll explain that he owes Gao the Greater twenty silver but can't afford to settle the debt. If you offer to give him the money needed to repay the debt (and succeed at a Charm, Intuition, or Intimidation check), you'll earn points toward the Open Palm. If you're looking for points toward the Closed Fist, you're out of luck as there isn't any way to manipulate the guy.
11 - Bandits' Loot
At the end of this cave, you'll find two bamboo casks labeled as "Bandits' Loot". Search them for a nice amount of silver.
12 - Guard Yung
Prior to the initial bandit attack on the beach, you can speak with Guard Yung here and extort money from him for his cowardice in the attack. Then, when you return after finishing the Spirit Cave, you'll encounter a couple of Gao's Mercenaries standing over the unconscious body of Guard Yung. With a successful Intimidation check, you can tell the dogs to "turn tail" to avoid a fight (and earn 100 experience points), otherwise you're going to have to demonstrate your combat prowess once again.
13 - Spirit Font
Meditating at a Spirit Font will restore all of your character's Health and Chi.
14 - Exit
These doors lead to the Swamp outside of Two Rivers, but you won't be able to pass through them until after you've emerged from the Spirit Cave and are in pursuit of Gao the Lesser.