Though I'm a bit late to this topic, thought I'd post to clear things up. I don't visit the Gaming Discussion forum often, so apologies that I couldn't help sooner.
Anyway, this key seems to cause quite a lot of trouble. Haha. I've gotten many emails about it, too. In verion 2.5 I moved the key closer to the location where it is needed. Before, in version 1.0, it was very far away. It was hidden in the island palace, so you had to back track a ton.
In version 2.5, I moved it closer to the lost child to prevent that tedious back tracking.
Icepenguin, No need to apologize and I actually feel privileged to get a response from you. Since I haven't found that key yet, I actually raised my heart, potion, and sword to the highest strength and have been playing the game from the beginning to see if I missed something. I have not yet found the key, because I was re-tracing my steps and sort of just stopped playing. I'm glad I checked the forum because now I will try again to look by the lost child. If its okay with you (like I said to lexluthermiester) I may ask for another clue if I don't find it.
Side note, I really enjoy Shadow of night and think its the best Zelda II hack, so thank you for that. Also love your Journey of A Day but only started it and then started your easy version of Shadow. When I finish Shadow that will be the next game I start up.:-)
Part II and III were too hard for me so I stopped playing them. :-)
lexluthermiester, Thank you for starting to play again to try to find it and answer my question too.
I feel lucky to have this awesome website and forum, where I can converse with Zelda lovers like myself and ask for help.
Thank you both again!!