The Coil of Rope will be used to get to the princess room in the Castle of Arturus. The princess room is up in a tower that is otherwise inaccessible. You’ll use the rope and tie it to the giant bow on the castle, then shoot the arrow to the tower. Afterwards, you’ll be able to walk along the rope to get up to the tower and go inside.
How to Get the Coil of Rope
On the Ye Olde Rumour Mille, go to the right of the mill there is the big wheel in the mud. On top of that wheel is a coil of rope. Jump up on the wheel to get the rope.