Lost Isle is a weekly 6-man instance that puts you against three bosses which drop boxes containing Ancient Equipment for Garment, Footwear, and Accessory slots.
Once you reach base level 150 this content will unlock in the instance menu. You may also receive a quest where you need to go to Comodo to speak to Captain Roger Walter to unlock this.
Location of Lost Isle in the Instance menu
Similar to Ponape Museum, this instance requires you to defeat 3 bosses. Each boss drops some currency and may drop boxes that reward Ancient Equipment. You only get drops from each boss once per week on the higher Warrior and Epic Spirit difficulty. Also you cannot get rewards from both so if you completed the first boss on Warrior then killing the first boss on Epic Spirit will not drop anything else. You can switch between difficulties to kill bosses you haven't completed yet but will only receive rewards for the first kill of the week.
Novice difficulty is the exception as this can be completed in addition to the harder difficulties. While the gear is significantly weaker from Novice difficulty and not worth investing much into, you do get some zeny for your troubles.
Try to find a group every week to complete this on Warrior to get a jump start on ancient equipment.
This gear is very powerful and significantly cheaper to upgrade compared non-ancient equipment.
Killing each boss provides you with some random drops based on the list below. Note that Lost Isle ancient equipment only drops for garments, footwear, and accessories.
These rewards will be either Blue Quality if you've cleared them on Warrior difficulty, or Purple Quality if you've cleared bosses on Epic Spirit difficulty. The only difference between gear of blue and purple quality is that purple quality has an additional random attribute line that always contains PvP damage received reduction. This means that if you're not into PvP you never need to run Legend difficulty so no worries!
Rewards include:
Warrior Military Reward Box
Shows you three pieces of ancient equipment and allows you to select one of them
May not be listed on the Exchange
Military Exploit Chest
Provides you with a random piece of Ancient Equipment
This box may be listed on the Exchange
Ocean Brand Currency
A currency used to purchase any Garment, Footwear, or Accessory Ancient Equipment of your choice for 80 Ocean Brands
Any unwanted ancient equipment may be salvaged using the Stove in Prontera which will give you 4 Ocean Brands
Golden Badge of the Seas
Lets you select a Military Chest for any of the five types of ancient equipment
Only drops from the final boss... not sure if guaranteed
Sea Spirit Ember
Used to repair or slot ancient equipment garments, footwear, and accessories
Zeny
You may also use Lucky Coins for additional loot which is highly advised until you get a few good pieces of gear.
Final boss drop that lets you select an ancient gear chest
Chests selectable using the new Golden Badge of the Seas
All ancient equipment roll with one random stat while Epic Spirit difficulty rolls the same PvP stat with a random value. These bonuses can roll stats that are extremely powerful and are competitive with other gear that costs more to upgrade.
Example of Offhand that rolled Ignore MDef 30%
Example of Armor that rolled MPen +10%
Example of offhand that rolled Max HP +12%
Each piece of ancient equipment has a bunch of common stats that could roll but every piece has a different stat that varies depending on the piece of equipment. The Devil Skull above has an ignore magic defense stat that can roll with a maximum value of 30%. Many of these stats are very strong and you'll want to keep rolling gear until you get the highest value. You can also upgrade these rolls through other means but you'll save a bunch of time and materials if you lucky into a great roll.
Since each piece has a special stat you'll want to skim through a list of ancient equipment to see what pieces to aim for. Miss Maven's ancient gear comparison videos outline the stats on ancient gear and also compares it to equivalent gear that you'd buy off of the exchange to help you determine which pieces to go for.
I could have transcribed all of this but I didn't want to steal her content so please give her some credit and skim through to the gear you're most interested in.
Garments and Footwear
Accessories
I've also included a couple of guide videos on each of the 3 fights, also put together by Miss Maven.
Boss 1
Bosses 2 and 3
You can also get details on the bosses abilities in the Traveler's Notes, the Brown Book in your inventory. I'm not going to dive into them here as there are videos likes the ones above.