Select the choice that allows you to put in the combination and pick 1221.
To swindle some free items, get Polly and/or Ferdinand to accompany you on your journey. When you are on the train, add them to your party. Press Triangle and go to character. Go to them and use their ability to gain free items. Parn is also a good character to get. Put him in your party, and if your better character dies, use his special ability to leave a dungeon for free.