I know that this is ancient, but I just found this thread whilst looking for Steeleye and the Lost Magic clues! I just read it with one of my sons, and got to the end without having thought to note down any message!
I think that your problem was a combination of an assumption that the answers are gemstones, and the fact that it's a slightly odd clue in itself.
The other answers are: emerald, sapphire, ruby, and another that you missed, which is 'AMBER'. ("Reeling in bream gives a great pleasure.")
The full clue is: "In part, gold encloses the secret. A precious description of the creature is hiding here." It's also in the context of finding some "slabs of a rich, dull metal". When you clean away the tarnish, "it gleams in the sunlight".
So the hidden words aren't gemstones, they're descriptions of colours that point to the creature that knows the secret of the lost magic. Given that, the answer isn't "GOLD", it's "GOLDEN", from "GOLD ENcloses".
I suspect that the series of choices you make leads to a set of valid messages, each of which could have won the competition. You come across beings that give you a word, such as "cherishes"; armour that whispers "the lost, the lost, the lost" or "the old, the old, the old" etc.; and you pass one of a number of animals when entering the final castle. So I imagine that the 'message' will be of the form "The golden eagle cherishes the lost.", or something similar.
I hope this helps anyone else who stumbles across this wonderful little book, and I hope that you get this reply!