Barnabas:Approaching Paros! This is where I saw my wife drinking wine with a beautiful witch.
Kassandra left the ship, and went to explore Atoll Point. On a hill, she saw ruins fitting Barnabas' description, and headed towards them. Within she saw a number of apparently tame pigs, wild boars, and lions, as well as a woman drinking the blood of a slain pig.
Kassandra:These pigs... look hungry.
She approached the woman. Noticing her, the woman rose and turned to greet her.
Circe:Welcome to my empire, traveler. I am its empress, Circe of the Oceanids.
Kassandra:You live here?
Circe:Where are my manners? You must be weary after your long journey. There's some wine in my hold, if you'd fetch it for us. I'm a bit indisposed at the moment.
Kassandra:I could use a drink. I'll fetch the wine.
Kassandra left Circe and found the wine within the ruins down the hill. On a broken pillar, she saw a toy doll, and inspected it.
Kassandra:This toy has teeth marks.
On the ground near the toy and the wine was a clay tablet.
Kassandra:This says her subjects are hungry. What subjects?
She found the wine, and grabbed it before heading back to Circe. She gave the wine to Circe, who smiled.
Circe:You look deliciously thirsty.
Kassandra:All right, "empress." Let's drink.
They toasted, and Kassandra drained her cup while Circe smiled, not drinking a drop.
Circe:That's it. Drink your last drink. Breathe your last breath. My subjects grow hungry.
Kassandra reeled as she spoke, feeling the effects of whatever was in the cup. Kassandra lost consciousness, only to wake up on cold stone floor in darkness.
Kassandra: Maláka, my head. Where am I?
She stood up, holding her head. A wild boar approached her from the darkness. Kassandra slew it and made her way out of the tomb and back to Circe's ruins.
(Same as initial Fight - Die, witch!)
Kassandra:I don't know what evil ritual you performed on Leda, but I'll kill you for it, witch!
Circe:My subjects will protect me.
Kassandra:Circe! I will rip you apart and feed you to your animals?
Circe:How dare you challenge an empress?
Kassandra slew Circe. On her corpse, she found a particular bracelet, as well as a list of Circe's victims and trophies.
Kassandra:The witch kept a list of names... and trophies. This bracelet was worn by a "Leda."
Circe's List of Trophies: From F., her bow. From E, a most delightful statue. From L, a commoner's bracelet. From M, a clay pot. P surrendered his sword. From X, nothing. A total waste. From K...
With these in hand, she returned to the Adrestia to inform Barnabas of what she'd discovered.
Barnabas:About my Leda, do you have any news?
(Chose "I got this bracelet from Circe.")
Kassandra dug out the bracelet, and showed it to Barnabas.
Kassandra:I found this bracelet... and a lot of pigs.
Barnabas:I can explain. Leda had it and was transformed into a pig by Circe. When she was turned back into a beautiful woman, she gave this to Circe to remember her by.
Kassandra:Barnabas, this bracelet could be anyone's.
Barnabas:No. I'm certain it's Leda's. It must be.
Kassandra:Right as always, old friend. Which means we're one step closer to finding Leda, I think.
Barnabas:You think correctly! The gods would never lie. Aside from Dolos. And Apate. But never mind them.
Barnabas took the bracelet.
Outcome
Kassandra found a woman who claimed to be Circe of the Oceanids, and ended up killing her, discovering on her a bracelet which might have belonged to Leda, Barnabas' lost wife.
Behind the scenes
Despite Kassandra claiming that Circe's list names the bracelet to have belonged to a "Leda", the list only lists the victims by, presumably, the first letter of their name.
There is a way to counteract Circe's poison, and recruit her: near the southeastern pillar is a bush with white flowers, which Kassandra comments to be "moly, a natural antidote for poison." Taking it will render Circe's wine ineffective.