I found this excellent YouTube video by PuzzleFox detailing how to complete the quest
Please Note: To clear the confusion regarding the Missable flag:
The game is a Metroidvania and nothing should be missable as you can roam freely after completing the story.
During the quest you will be in an ice cave with a frozen lake. You need to break it to get the necessary item for the quest. around 10:30 in the video.
But if you break the ice and get the item before being asked during the quest you will not be able to complete it due to some glitch.The ice should not be breakable before the quest but some gamers reported being able to do so after multiple tries so be aware.
Upon completing the quest Willo will open
a locked treasure chest required for:
And you will receive "
fast dive fish" ability upgrade required for:
if you are not following the video this is the location of the cave:
And this is the breakable ice: