There are a few ways to win, but below is the speed run version.

Hover over to view spoilers:

Use Cursed Dagger to change skeleton to zombie.
Use Defend before stealing in order to avoid damage.
Use Steal twice on Zombie to obtain Invitation.
Use Cursed Dagger to change zombie to confused townie.
Use Broken Arm on confused townie to snap him out of it.
Use Talk Topic: Reason to get regular townie to leave.
Use Invitation on Butler.
Defend then Steal on Dancer to get Love Letter.
Flee from Dancer.
Use Love Letter on Butler.
Use Talk Topic: Message on Dancer.
Use Defend to prevent damage.
Use Strategy Guide to do big damage on Cult Leader.
If Cult Leader summons Cultist, use Pray on Cultist.
Cult Leader has a number of items that can help.
Clay Tablet can be used by Wizard to minimize Cult Leader’s attack damage.
Apple can be thrown by Cleric for some damage.