Post your monster box. Chances are you just don't have a very good team setup, but often times you can improve your setup even by just levelling trash that you normall would have been feeding to your mains.
The boss of Sea Cavern Mercury / Path of the Seabed has higher than average defense, so unless you're doing more damage than his defense, you're going to do 1 damage. So this is probably just a matter of not having your guys levelled up enough (weak attack), or using fire monsters against water, or not making big enough combos, etc. But if you post your monster box perhaps we can help.
Generally speaking, I haven't found a hard paywall yet. After Castle of Satan the difficulty does ramp up substantially, but generally you can get items that are useful enough to progress though farming / special dungeons, even though it can take quite a while to get the drops you need (or quite a few pulls from the rare egg machine). So perhaps you can call that a "soft" paywall, where it definitely helps you progress more quickly (although even paying you need to put in quite a bit of time), but isn't strictly necessary.
Oh I think I see now, thanks. I'm unable to post my monster box right now but, I think the case is that I'm rather underleveled.
Then I suppose my next question is, what's the best way to feed your main monsters? So far I've just been getting the Carbuncles, feeding them, and then when they're pretty high enough level, I feed them to my mains. But then I also run into the problem of lack of coins. I'm not really sure how to get enough coins outside of the Weekend Dungeon.