Check the Fire red guide for what to do in sevii islands - important things: island 1 (request in pokecenter to search for ruby and sapphire), island 1 mt ember (finding ruby), island 4 icefall cave (rescuing elite 4 member, necessairy for open island 6 dotted hole / ruin valley), island 6 ruin valley (for finding sapphire), island 5 rocket warehouse (for getting sapphire back and open way to new world.)
when defeating rocket admin, you need to go to island 6 back at north and swim til Outcast Island. in the north east corner of the water way there should be a small passage (if not yet defeated ware house a man blocks this way). This is the passage to Iron City.
From there on you could check the guide here to walkthrough if necessairy.
@Shogun: is it normal that it shows Pallet Town when leaving outcast island for the new city? (same for map, it shows again kanto, and flying is connected to the kanto towns.^^
