Instructions
Play through the game as either Sonic or Blaze until you enter the Water Palace zone. If you play as Sonic, then the Water Palace is second zone you enter, following the Leaf Storm zone. If playing as Blaze, then Water Palace is the fourth zone you enter.
Defeat the enemies you come across by using Sonic or Blaze's spin move as you pass through them. You can also jump on their heads while spinning in order to destroy them. After a short stint of walking on land, your character will be forced to go underwater to continue the level.
Watch the oxygen meter in the top right corner while you are underwater. It displays the amount of oxygen your character has remaining. If you are playing as Blaze, then you will have 45 seconds worth of air underwater. If playing as Sonic, then you will have 30 seconds of air. Your character's oxygen level can be replenished by either exiting the water or collecting one of the many air bubbles that seep through the level's floor.
Jump over the pits of death that you will frequently encounter in the Water Palace. If your character happens to fall into one of these pits, you die instantly. Sonic and Blaze can easily jump some pits, while others require them to have momentum. Hold down the spin button for five seconds, and then release it to charge forward right before jumping a pit. This will give your character the speed they need to jump large pits.
Watch out for any platforms that shake when you stand on them. These platforms are usually located over pits of death and collapse if you stand for very long. Make quick jumps from platform to platform to avoid falling into the pits below. Watch out for platforms that display a numerical countdown on the side, which explode once reaching zero.
Encounter the Water Palace's boss, Loch-ness Mecha, at the end of the level. The Loch-ness Mecha only receives damage on its head and only when blinking. You lose life if you hit the boss when his eyes are open. Hit the boss with your spinning attack to cause damage, and dodge its many attacks by traveling around the circular track that surrounds him.
Hit Doctor Eggman when he emerges from the Lock-ness Mecha's head once you cause considerable damage to the boss. Watch out the the belly-slam that the boss starts to use at the point in the battle. The best course of action is to run away from it whenever Doctor Eggman yells out, "Take this!" Spin-dash underneath the Loch-ness Mecha's body in order to dodge his belly slam.
Move to the back side of the Loch-ness Mecha, near its propellers, once water drains from the level during the fight. This signifies that you have only two more hits in order to defeat the boss. Do not touch the boss' propellers, as they will hurt you. Stay as close to them as you can without touching them. This will keep you from harm's way when it does its ultimate attack. The Lock-ness Mecha will try to chomp you with its mouth at this point. Dodge its bite attack by staying near his propellers. Then, jump on its blinking head as he retreats before biting at you again. After you land two hits on the Lock-ness Mecha's blinking head, the boss will be defeated and you will have passed the Water Palace zone.