I started up a new game and cheat-coded my way through the game today to get to Arlania.
Sure enough, the old boots you find buried in the tutorial dungeon need to be worn when you visit the inn. I had to go there to get the elf island quest, then get the new customers quest, then go there again for him to tell me I had a parcel waiting for me. (Not do the quests, just receive them first)
The parcel itself lets you buy factional troops in whatever increment would put you at the max for your leadership.
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