This leads right into the next quest- face Li Fei in combat, and win.

This fight is, like the monkeys, more annoying than difficult.  With the flame of the torch boosting you, your Health total is very large, and Li Fei can deal little damage to you at a time.  He has two attacks that he uses near constantly- the first is a series of spinning kicks.  These kicks will hit you from any distance, as long as the first one connects- so don’t really worry about dodging him.  This one isn’t so bad, as he remains still while he’s using it, but the other one is immensely aggravating- he teleports behind you and slams a double-palm strike into your back, launching you roughly half the pool’s length.  This really cuts into your attack time, and even when he misses he’s still behind you.  Speaking of missing, you’re going to do a lot of that yourself, so bring your stoic face to this fight.

Fortunately, he can’t deal any real damage to you, so you will eventually wear him down and win.

With the fight won, you can talk to Li Fei and get a new, stronger weapon and a second bag, the Master’s Haversack.

Li Fei now tells you that you are worthy of passing- and that Huo rests beyond.  You are to bring him the kindling and wind to feed him and fan his flames and then, if he is willing, you can lead him to the Temple of Five Dawns.

The fiery barrier behind Li Fei is now gone, and you can head up into a third room where, somewhat ironically, Huo floats over a brazier set right in the middle of a pool of water.  Climb up onto the stones ringing the pool and use your offering- and then Huo will speak to you.  The somewhat feline spirit smiles, and then bounces around a little, apparently ready to follow you whither you wish to lead.... which is to say, to the Temple of Five Dawns.

The Temple is to the South of the village, beyond the dogwood grove where you gathered kindling, up a rather large set of steps called the Dawning Stair.  Entering the temple at the top causes Master Xi to welcome the spirit, who moves up to the statue in the center and does a bit of a dance- then vanishes.  Tiny insects of flame- fireflies, if you will- then float around within the temple, symbolizing the presence of the little- but clearly potent- spirit.  You will also see that Aysa and Ji are present, though they don’t really have anything to say right now.