I haven't the faintest clue what it's called and it has been likely over ten years since I last played it, but I'll toss out some of what I do remember about it and hopefully someone will know what I'm talking about haha. I believe the cover of it showed your character and some little pink dragon thing standing next to him and the two of them are looking at some huge tower in the distance. You were some kid in all blue armor (I always joked to myself that he looked similar to Mega Man) in a town by the sea. Eventually, the little pink dragon thing with tiny wings that walks around on two legs shows up and adventure ensues with it. You end up going into some mountain at some point where you fight some stuff (including some mushroom people) and eventually I believe you get knocked out and wind up in some other town.
After that, you run into some guy in a town who has what looks like an adult version of your little pink guy (only he's brownish/yellowish) and you're forced to fight him in some arena to progress the story, though it's impossible to beat him. I don't remember a whole lot after that point other than I know you end up getting a flute or something that you use to call some waterstrider bug and you can travel around on it to different places on the world map (I remember going somewhere I wasn't supposed to yet and fighting some weird looking dragons in some arctic area that I was barely able to beat and received tons of XP from them, allowing me to do some unplanned grinding). You also had these little wind-up robot guys with different looks and powers that looked like eggs with only arms and after using them on a turn, they took (I think) three turns to use whatever their power was.
So...yeah, hopefully someone has seen/played whatever game this is and remembers the name haha.