In order to get the canoe, you must go to the town of crecent lake. When you eneter the town you must go to the tip of the town and to the right, you will find a path leading south, take that path. You will then see the sages on ur right, talk to the one that is right of the sage that has a blue coat on. He will then give you the canoe and ask of you to destroy the fire deamon.