"Go into Sandy's house, and distract him by telling him that there are mutant herring falling from the sky (it may take a few trys),"
I tried all the distractions and this one worked for me, "But the pygmy shrews have eaten all the sand."
It may be different for different people or may just take multiple tries. The options are: "There's a huge mutant herring about to drop from the sky!" "But the pygmy shrews have eaten all the sand!" "A small parrot with a pink bannana is sitting outside your window!"
"Once you get off the boat, head Southwest until you see a building with Sandy in it." You go Southwest you'll end up in the jungle by the metal dragon dungeon. Sandy's house is just north of the pub/bar in Brimhaven.