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I'm playing the windows version of The Guild of Thieves. I'm in the castle courtyard, I have the cue, maggot, cotton and needle.
You can fish from the courtyard, but you should not be able to, judging from the picture and the description. The moat is on the outside of the castle. You can also look at the moat from the courtyard and read the sign. That the moat object is accessible from the courtyard seems to be a bug to me.
I fixed the cotton to the cue ("the cotton is now fixed to the cue"), put the maggot on the needle ("the maggot is now on the needle") and then do "put the needle into the moat". Instead of the expected success, that just produces the response "You'll need a rod to do anything!"
This is because the pre-existing connection between the cotton and the needle came undone during my prior experiments with that puzzle, I had used "use cotton to tie needle to cue" (response: the needle is now fixed to the cue) at some point.
The solution posted on Lemon Amiga also mentions this problem ("DON'T remove the needle from the cotton...I could NEVER find a way to put it back!").
When the game is in that state, neither "fix needle to cotton" nor "fix cotton to needle" works.
This behavior is mean. The original description of the needle mentions that is is already fixed to the cotton, and that "the needle would be very difficult to thread", but still it's very frustrating when you accidentally destroy that connection since there's apparently no way to re-create it.
Right now, the hint system adds to the frustration in this situation. It suggests "Maybe put the needle into the moat", even when that is not going to work.