The Dungeon of Blood has two parts to it. The Bandit Hideout and the Shaman's Magical Labratory. The Dungeon of Blood's entrance is located in the Forest of Blood.
The Bandit's hideout is broken into two parts, North and South. The South room contains various mixed loot.
The North Room, features a chasm which requires a rope to cross, a secret door, a magical barrier and a combination lock.
The combination lock is made of 3 switches, of which there can be only 9 possible combinations. For the author the combination shown on the map of Down, Up, Down, opened the door.
The magical barrier can only be removed by starting the Shaman's Three Skulls Quest.
Shaman's Magical LabratoryEdit
When you enter this area for the first time, the door will shut behind you, locking you in until you talk to the Shaman and most likely start the Shaman's Three Skulls Quest
If you do not start the quest, the Shaman will attack you. If you defeat Shaman, you will get a cool wand and scroll (this 'town portal scroll' will allow you to escape the locked room). It has a pentagram teleport to Another Dimension, but there is nothing of interest there.
Once the Shaman's quest is complete, this area will no longer be available to enter.