Here are the steps:

SPOILERS: Highlight below to read:
  • drag a villager to the fire; he will move the cauldron onto the fire;
  • drag one or more villagers to three herbs; watch to make sure they are 'collecting' not 'studying';
  • drag a villager to the fire; he will set off to add water;
  • drag a villager to the fire; he will set off for food;
  • when the last villager returns the stew should be ready. You can add water and food before the villager/s add the herbs if you want.

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To err is human; to arr is pirate.