After you come down from the first level you have a big fight. I killed everything, and there is a lever on one of the pillars, but every time I click on it the lever says its locked. How do you pull the lever and move on?

Read the IWD Online Solution here in the IWD section. I didn't start it for nothing ;)

Anyhow, you need the PAINTED PAW STONE to pull the switch. Explore the entire level as you've obviously missed it, or check the Solution and the online map of that level for the directions to its hidden location.

Syl