Go to the village gates; there is another Nali Healing Fruit here, plus a Nali Rabbit which hops off towards a hut ahead. Follow it and enter the modest home, killing the Fly that ambushes you as you enter. The fire is lit but no-one is home, so collect the Flashlight from the table then destroy the two barrels and the vase to retrieve Bandages, a Health Pack and an Eightball Gun. Climb the ladder into the loft (it's dark and you'll need to toss a Flare) to collect a Clip and read a diary.
"Sadness fills my soul. The Sky Demons came and took many of us to work in the mines. If we don't obey we'll be slaughtered. The Sky Demons know about our secret in the abbey, but haven't found it."
Leave the house now. Watch out for the Flies that have appeared outside, then circumnavigate the walls of the house to get two Nali Healing Fruits.
Enter the second house, which is in darkness. Kill the Fly here. There is an Automag on the table, and if you climb the broken ladder to the loft you can get Tarydium Shards and a single Flak Shell (Flak Cannon ammo). Leave this house now - kill any more Flies that have appeared - and go round the back to procure another Nali Healing Fruit and another Flak Shell. Return to the centre of the cluster of houses. There is a well here but with no visible way to get inside, so shoot the barrel nearby to collect Tarydium Shards then go into the third house (the one with smoke coming out of the chimney). A Nali inside prays by his fire. Read his diary on the table:
"I'll not stay here any longer. With the next passing of the two suns, I'll try to reach the Sunspire. There I will be safe. Before I go I will retrieve the sky demon's weapon from the abbey."
Sounds like there's a useful gun around here somewhere... anyway, raid the hut; barrels contain Eightballs and a Flare, and there is a Health Pack by the fire. In the loft is an ASMD Core. Return once more to the great outdoors.
Round the back of the third hut is a Nali Healing Fruit. Collect it if you need to, then enter the final hut. The hut is dark and in disrepair; collect the Flare and the Eightballs here then leave the house. When you have visited all of the houses, take a walk up the hill. You will see the abbey mentioned in the Nali's diary ahead, with a wooden gateway providing an access point in the stone wall.
Before entering though, head round to the left of the stone wall and up to the cliff at the top of the slope to get two Clips and a Nali Healing Fruit. Return to the gateway.