You start out in a cave, leave it. Use the compass to find the horse. Talk to it. Go to the top of the area and exit up. Talk to the bridge guard. Find the merchant and buy his shovel. Go back to the screen below. Walk to the center of the pattern and dig. Dig until you have food for the horse, then talk to him. Ride him to the screen above going as far up as you can until you find a cave.
Enter the cave to go to the next screen digging up more food for the horse as needed. Talk to Merlin, then go to the house on the screen below. Go inside and talk to the bridgekeeper. Go in the cave at the lower part of this screen (after leaving the house) and get the magic stick. Go to the screen above. Talk to Merlin again, then talk to the villager. Kill all the knights and talk to the villager again. Go right and dig everywhere until you get the large turnip, you'll know it when you see it. Feed it to the horse and go right from where Merlin stands.
Use the compass to find your way around, then equip your sword and shield. Get the recovery heart and the slingshot. Go up a screen. Pass the plants when they stop moving. You will now fight one of the worst bosses. When not slashing, keep moving. Preferably to the left or right. When the tentacle comes up, slash it. This will make the plant open its mouth. When it does put the stick in the plant's mouth and slash the plant until the stick goes flying. After beating the plant go down as before to continue to the next chapter and save.