And sure in language strange she said – (line 27)
The lady speaks in a strange language. Is it actually a different language, or does she just have an accent? Or is she speaking a different version of English (perhaps a more everyday, common language) from what the upper-class knight is used to? It's unclear.
She took me to her elfin grot (line 29)
The lady takes the knight to her "elfin," or elfish cave. Was it filled with obvious signs of magic or witchcraft? How does he know that it's "elfin," and not just a cave where this lady lives? We don't get any of the details, so it's hard to tell.