So, I recently started playing all the Ultimas in order and am currently playing the fourth game. I've become 8 parts partial avatar, found three stones, found the candle, book, horn and skull, and recruited every possible party member. I know where the mystic armour and weapon are supposed to be, but here's the problem: They simply are not where they are supposed to be. I've searched every singe square both in the grove and in training room and searched with S button, but nothing. I've even looked at couple of let's plays and maps where the exact locations are supposed to be, stood right there and searched, but still found absolutely nothing. I checked my inventory if I'd found them and just not noticed, but nope. Nothing there either.

What's going on? Am I screwed?

"When the student is ready..." ;)

I noticed you didn't mention the Bell. It's possible you need that too. Could that be your problem?