To begin the quest, talk to the Composer and choose Oca...What?. He will tell you the following:
I think it's time we fashion you a more...refined instrument. We're going to make you an ocarina! Oca...what you say? Ocarina! A beautiful instrument that sings with such melody so as to make you cry upon hearing it.
I believe I have all the resources I need to craft it, but I can't quite remember the details. There's a book though! It's called "Blueprints for an Ocarina." Can you bring me that book? Some of the more...oh I dread to use this word...sophisticated pirates should have one. They are are likely keep it locked away in their little chests.