Unlocking this achievement will also unlock the Elves as a playable race.
When you're adventuring around on the Road you'll encounter an Old Hag. Allow you to join you in your travels.
You need to bring her to Mythrandir, the elf city. This can be found in the forest. Delve into the deep forest and eventually you'll encounter a waterfall. You can jump down the waterfall, but it will do a lot of damage and may kill you if your health is low. Otherwise, if you can fly, or have turtles you can ride (
) you can safely descend. Also, if you have a barrel you and ride down without injury. A barrel can also be obtained on the Road (like the old hag) by helping the scared farmers.
Once you enter the city, drop the Old Hag off here. You will turn into a beautiful elf and propose marriage.