Final Fantasy VII Walkthrough – Bone Village and the Sleeping forest
Items: Buntline, Lunar Harp, Mop. Water Ring and Kjata Materia.
You'll recognise Bone Village easily...Its made of bones and is surrounded by a pale coloured forest.
I suggest you head into the Sleeping forest before you can activate it with the Lunar Harp as this will give you a little longer to get the Kjata materia by going around in circles, you have to find the Summon before it disappears.
When you enter the village there'll be a small hut where the boss is stood, talk to him and he'll tell you that you can dig up the Lunar Harp here. Basically position workers as far spread as possible, set the bomb and wherever the workers look is where the Harp is. Select the dig point and it'll appear in the box overnight, if you don't do it first time keep trying and you'll get it eventually.
Now go through the Forest getting the Summon Materia if you didn't get it before, you'll activate the forest and can follow a path to The City Of The Ancients, get the Water Ring from the chest on the way.