Harkyn's Castle  
 
Spoilers, Level 2

The answer to the riddle is "Vampire" (yes, I know it's obvious, but I have to put everything in for completeness). 
Grab the silver square (Electronic Arts logo piece one of three). Make sure that you have an empty inventory slot somewhere before trying to grab it. 
The Magic Mouth will give you a 'Ybarrashield' if you answer 'shields' as the last word of the poem it recites 
 
1 The air nearby has a foul reek to it. 
R Riddle 
M Magic Mouth 
  Silver Square 
