How can I free Marko from jail?

Hint 1 of 5:

Talk to him, and he'll tell you what you need.

Hint 2 of 5:

What shapes are most magnets?

Hint 3 of 5:

They're shaped like horseshoes.  You can make a magnet from a horseshoe.

Hint 4 of 5:

Electricity can magnetize some metals.

Hint 5 of 5:

There's an electric spark near the water wheel.  Put a horseshoe in it, and
you will get a magnet in exchange.