The Inscrutable Power Source is given to the player by Wild Flower/Chai Ka after the demon attacks the player at the dam site and he is defeated. It is needed to power the Marvelous Dragonfly, the new flyer that the player acquires at the pirate lair of Gao the Greater. It allows the flyer to travel long distances. According to Kang the Mad, only 2 of these exist in the region. Kang destroys one in order to prevent Inquisitor Lim from making off with the Marvelous Dragonfly.
It should come as no surprise that you can't figure out how this device functions, or even what it really does. A complicated collection of gears, pistons and various projecting apertures befuddle the mind but still speak of virtually limitless power if harnessed properly.