"Meanwhile at Demon Dan's."
"Rescue me you little twit! My wrists are chafing, and I've already broken a nail. Prove to me you're a real man by getting me out of here."
Now you're inside someone's house which coincidentally look more like a bathroom (or a sewer) than anything else. There's also a lot of other stuff on the screen at the start (a light switch, and two spinners), but it's all useless in my opinion, so head right, jump over the springboard, and quickly move by the proximity mine until you see the big, new thing in enemies: a sewer-dwelling Elvis impersonator. Heh. Kill him, and then jump on the spring to get on the pipe above.
Go left and either jump on the Frog hopping around or the spring at the left end of the pipe to get the heart. Now, go right again and jump on the springboard to land on the pipe to the right. Jump over the spinner on the ground, and keep going until you see a gap in the pipe above you. Use the springboard nearby to get up there, then the other springboard to get to the top. Now go all the way to the left and grab the extra life at the edge, just don't touch the spinner nearby or you'll get knocked off the pipe.
Either way go right again until you see another Elvis impersonator. Kill him and continue right, but there'll be a dead-end over there. The only way to get to that pipe ledge is to use the springboard that’s in the air to catapult yourself to the pipe above, then jump off to the pipe you were trying to get to. Now, jump on the springboard to get across the water, just don't fall into the water, or you'll lose a life. It's kind of tricky how the springboard works, especially since you're going across quite a bit of water, but this tip should help you out.
You need forward momentum to cross the water, so bounce once, then press right and you should fly across to the other side. There's more springboards to greet you on the other side of the water and a spinner at the top, so don't hit it or you'll go flying into the water. Once you've made it to the top, you should see another Elvis impersonator, so jump down, grab a wrench, and toss it at him for an easy kill. Now, all you have to do is go to the right and you've completed another stage.