DQ6 Walkthrough - Poseidon's Keep in the Real World.
Use the Lorelei's harp while sailing across the ocean. The Providence will go down to the ocean floor. You can float up again by simply pressing A.
Head to the southeast. You'll find an undersea castle in the southeastern ocean of the World Map. Enter the castle, Poseidon's Keep.
Go down the stairs. Talk to King Poseidon and he will tell you about Gracos.
Head for Gracos's keep. According to King Poseidon, it's located at the east of Poseidon's Keep. However, it's to the west of Poseidon's Keep on the Wold Map.
Sail to the center of the southen ocean and move slightly to the east. Use Lorelei's harp to dive. You will find Gracos's keep, Seabed Shrine there.
Talk to King Poseidon. He will share the secret about the legendary Shield of Velora with you. The secret is "In the small room of repetition, the true path forward lies at three levels down and two levels up".