Ah, the Elder Wyrm is a total bastard! I remember just walking (well, running for my life) round him and taking him out later in the game.
Regarding loot, bear in mind that the bigger the chain, the better the loot. So it's best to simply kill one type of enemy. The undead are total bitches for doing this, so it's best to go places that they are. The Stilshrine of Miriam is probably your best training spot at the moment. I made a ty and hard to understand map for you, which might help if you can understand it. Basically, enemies respawn if you go two screens away. So, you run back and forth along the dotted line until nothing appears, then run back to the start point. Then you do it again. You'll easily be getting 30+ chains per run, and this leads to massive loot and easy XP.