Items: Chocolate, Cookie, Mystery Bag, Phonograph
When you enter this dungeon, you'll find that there are a series of wiry statues, with three on either side and another directly ahead that wants to know a password before you can proceed. It's time to quiz the other six statues for clues. The first one on the left says that the password is 'I' and that the next clue is two spaces over. If you talk to the second statue to his left, you'll be told that the password is 'L' and the next part is to his front. Cross over the center of the room to the corresponding statue on the other side and he'll say that the password is 'L' and the first part is to his front and side, which means that the middle statue on the left side of the room has the first letter of the password. That statue claims that the password is 'D' and says the next piece of the password is to his front. Cross back over and the next statue says that the password is 'R' and the next part is to the forward left. That would be the first statue you checked, which was 'I.' So the password can be only one thing: DRILL (the final statue has nothing to share, except his belief that thinking up passwords is tricky). Now that you are properly armed with the correct password, go talk to the statue that blocks the way forward and tell him your answer. He'll open the door and you can pass through to the next room.
From where you enter, look to your right left and make sure that you smash open the purple vases. Then run forward through the hallway and follow as it descends along a staircase. You should see a treasure chest ahead, on a raised pedestal. Go ahead and jump at it, but you won't make the leap. Instead you'll fall to the area below, where there are stone statue heads, pillars and vases. You should break those with charged attacks, of course, but first there are some red spiders that will drop down from the ceiling. Deal with them, then start drilling debris for coins. There's also a portion of weak wall near the statue head, so you should take care of that, too. A girl has to have priorities!
When you've collected what treasure you can, there's still the small matter of leaving the room. Behind the statue head, you'll find a lever. Pull it to make a blue platform drop down. Step on it and it will lift you high enough that you can safely jump to that treasure chest you couldn't reach before. Open it to find a COOKIE. From there, jump back onto the floating ledge, and then back again to the other side. It's a long leap, but you can make it. If you fail, just drop down and pull the lever again to re-orient the platform and make another attempt. Once you make it back to that other side I mentioned, though, drop to the flat area to the left. This will prompt a Phantom to send a series of spiked balls rolling toward you. To avoid them, you need to leap over them just before they can hit you. The problem is that they'll roll back and forth through the area as you make your way across it, so you may have to jump them several times. When you reach the end of the space, the Phantom will disappear through a low hole. There are also vases here, which you should obviously break. You can't quite squeeze through the hole after the Phantom, but you'll notice that there are spidery signs of decay along the surface of the wall. Use a powered drill attack to break through and get some coins.
On the other side of the rubble, break the pot to your right and you'll probably see a telltale blue circle that means there's an enemy nearby that you can target. Start powering your drill, then drop down to his level and take him out quickly. If your attempt fails, you'll probably just drop next to the level below (along with your fleeing enemy) and have to fight three Phantoms at once. A charge attack will be a good start to things, then some Tornado Spins. Once it's just you and the guys in the spiky belts, charge your drill and let them come at you single-file, then charge through to remove the belts and finish them off with more spinning attacks for a nice assortment of Junk. Now there's the matter of progressing to the next area. To do so, hop back up the raised ledges you just descended, and on the other side you'll find a lever you can pull. Doing so will cause a door to open elsewhere in the dungeon. Backtrack along the area where the spiked balls started rolling toward you (they're following a different pattern now that's easier to avoid, thankfully), then take a right and head past where the floating ledge allowed you to reach the treasure box. Drop down and proceed through the door at the end of that corridor, which is now open.
You're now in another room. There are four pots nearby, two on your left and two on your right. Smash them, then set about the task of crossing a wide gap that fills half the room. You'll do that by dropping down to the floor below, where beams of light make things very dangerous. As soon as you land, start mashing the 'Square' button to glide through the hazard and toward the ladder located toward the right edge of the wall on the opposite side of the area (well, I'm assuming some people will have to do that; I always wait until I see a wide break in the lines, then just run for it). Anyway, from the top of the ladder you can advance to a platform that refills your life, and also there are pots to smash. There's even a destructible stone pillar if you're feeling frisky, though it contains only a few paltry coins and isn't worth getting if you're afraid you might fall back down to the floor to your left. Do what suits you before proceeding through the nearby doorway into the next room.
Here, there are cannons positioned in three corners of the room. You can take them out with charged drill attacks to make things easier. Start with one on your right, then one in the next corner from there, and finish it up with the one that would've been to your left as you entered. Now you can turn your attention to a recess in the floor, where you should smash some vases and pull a lever to make some iron grating rise. However, some armored Phantoms will attack. Use your Drill Tornado to eliminate the threat, then a charged drill to break through the weakened wall they were guarding.
Through that hole, you'll notice a mound of soil ahead that you can use to recharge your drill. There are fences lining either side of the room, with cool boulders behind them. You can break holes in portions of those fences, including the ones right by the door, but don't start there. Instead, walk toward the mound. As you approach, two Phantoms will attack. They can absorb your attacks unless you attack with charge attacks, so do that to remove their armor and collect junk. If you need shelter while charging, you can keep boulders between yourself and your enemies so they can't harm you. Once the enemies are stripped bare, Tornado Drill attacks should make quick work of them. Now you can go back and drill through the room's debris at your leisure. There's nothing better than coins in any of the rubble, but that's okay.
When you're done looting, head through the door and into the next room. There's a single cannon aimed straight at the door, with a Phantom manning it. He fires as you enter, so move left to avoid the shots and start charging your drill, then head forward and take out the cannon and operator with a charged shot. Along the way, an alarm will sound and two more Phantoms join the fray. You have to keep moving at this point, since your regular attacks and Drill Tornado won't harm any of these guys. The cannon should be your first priority, and then any other incidental foes. Once you're free of the hazard, you should also notice vases and weak walls along the side of the room (as well as stone columns). Tend to those with your drill, as well.
From where you entered, the weak wall to the right leads to another chamber with some electric barriers you have to Guard Dash your way through so that you can reach and pull a lever. That'll open the door in the previous room and you can take out the electric generators with charged shots on the way back through, along with some pillars. The weak wall that was on the left leads to a room that holds a treasure chest with CHOCOLATE. Once you grab it, several spiders will drop to attack. Take them out with Tornado Drill attacks, then return to the previous room and pass through the archway you can now access.
Through there, make sure that you break the pots on either side. Then drop down climb the ledges to your right and left, where levers wait. When you've pulled both, you'll reveal a chest in the middle of the room below. Drop down and open it to find the MYSTERY BAG. Then proceed toward the door beyond but be ready for cube-shaped enemies (four of them) to drop and attack. A single Drill Tornado attack will take them all out if you time it right and net you a bunch of valuable coins. When you pass through into the next room, you're in the treasure room. Break any rubble apart for coins, then step onto the altar to grab the PHONOGRAPH. Now you'll be taken back to the map.
Head to Monster Village. The Phonograph you should give to Poco. He'll be happy and that will cause more of the map to be revealed. Unfortunately, it's not a portion of the map that is of any use to you. Once that's taken care of, there's only one present option for your continuing adventure. Head back out to the world map and this time go to the cave in the northeast, Spinach Caverns.