Krawley is the true culprit of the entire Tale of Woe. He offered potions that granted the citizens of Neovia their wants, but turned them into monsters, and he promptly disappeared. He later reappeared and led Gilly to an old building where she discovered Sophie's missing ingredient. He finally watched over the town's restoration, but disappeared in a wisp of purple smoke.
It is thought that while the citizens of Neovia were trapped as ghosts, Krawley impersonated Dr. Edward Alexander at the Meepit Oaks Sanitorium, providing the staff with a magical elixir that calmed the patients. He also gave the nurse, Lucy, a magical flower that would prove to be the final ingredient Sophie would need for her potion, before again disappearing.
You don't need me, though. What you seek lies inside.