Instructions
Go to Flopside's second floor.
Talk to Merlee at Merlee's House of Charms when she is behind the counter.
Go to Flipside.
Go to the Fortune Shop on Flipside's second floor, and talk to Merluvlee when she is behind the counter.
Go through the red door on Flipside's tower to enter Chapter 1-1, and go to Bestovius's house.
Use the Return pipe, re-enter the Chapter 1 door and select the second chapter.
Go to the last house in Town to talk to Watchitt.
Use the Return pipe, re-enter the Chapter 1 door and select the fourth chapter.
Navigate to the Star Block at the end of the level.
Revisit everyone in the following order: Watchitt, Bestovius and Merluvlee.
Deliver the crystal ball that Merluvlee gives you to Merlee in Flopside.
Use the key that Merlee gives you to unlock the door on Flopside's first floor. The chest that contains Piccolo is located inside.