Once the iron gate is open, run back to the start. There will be two sets of staircases as you enter the room - a smaller staircase on the left most side will lead to two more slimes and finally the smoke machine.
Once the smoke machine is destroyed, a new passage will open up directly across from the staircase. Defeat the three Braves to retrieve the key.
Once you've returned to the lower level and opened the magitek prison, a cutscene will reveal additional enemies including 3 named NPCs.
Suggested tactic (I play Bard) - focus on the Conjurer first to prevent heals, then target down whomever Alphie and Yugi have gotten down the farthest (probably the Yuyuhase or an unnamed NPC).
Pull any hate off of Alphie as he is your healer and then focus fire on whatever Yugi is attacking.
This means she'll then help you focus fire on whomever you're after.
Kill Ilberd last -- as long as Alphie doesn't have any aggro he'll keep you up to tank through whatever his attacks are.