HaydenStudios said:
My belief that Misery had him do it out of greed or other such evil desire may only be a guess, but a somewhat educated one at that.
Sometimes the wording of a sentence can imply things that are not explicitly stated. I'm doubtful that Misery had any pure intentions, as it says "Because of this offense,". By describing it as an offense, I'm guessing that she was up to something less than innocent. I don't know to what extent, but I think she wanted him to make it to serve herself. If she was desperate, or intended to use it to help others, I'm doubtful that the game would have referred to Misery's forcing Ballos to create the crown as an "offense".
I know that this was a bit of speculation, but surely you see at least some basis to this.
I used to imagine that Misery had been tricked into making the crown, by the first crown bearer, Halda. Maybe Misery was just at a rebellious age, and the wrong guy manipulated her, without her realizing it; maybe even tricking her into the curse. Maybe Misery found Halda charming, and fell in love (perhaps he took a different form, I always thought of him as a demon, rather than a cat... [Demon Crown...]) And then she was betrayed.
I even once thought, what if that demon Halda was behind what happened to Ballos? A king becomes jealous of a great hero to the people, so he tortures him suddenly? Maybe if he was an evil king... But, if someone was manipulating the King into distrust, jealousy, and finally hate. This could all be part of the Demon's work. Such powerful wizards/witches, Ballos and Jenka's bloodline undoubtably did great things in their long lives... it wouldn't be much of a stretch to think that something evil might have been holding a grudge against them.
We don't know anything of their past, or of the earlier crown bearers... but that's one tall tale that came to mind to explain it...
As for Quote being in First Cave... maybe the Hermit Gunsmith goes on walks and picks up junk to make guns with. He uses First Cave as a Closet to keep all the junk he collects (... maybe he's low on junk, or we can't see it in the 2nd dimension/it's dark and unimportant to the story). Maybe he discovered Quote and dug him out of whatever hole he was in, and dragged him to the Cave for sprare parts.
But, thanks to that Quote woke up... or something. lol
Since he was in such good shape though, it would be a shame to break such craftmanship, perhaps he kept him around for a rainy day or decoration.