You begin this stage at the very bottom of the map. Your goal is to climb up to the top where the boss of the stage, the Blue Dragon, awaits. Immediately to the left of your starting point is a captive who runs a shop. Purchase any weapon upgrade if you can afford one. If not, don't despair, there is another shop owner near the end of the stage.
(A): After dealing with a Fire Demon to the left, and orc to the right, and several slimes in between, you will have to deal with the first boulder that falls from above. To to clear the area out before you advance and trigger the boulder and have to run back to the left to dodge it.
(B): On your way across the first optional platform, two mummies will escape from the cave. There is a captive who rewards you with money, followed by another cave with two mummies. If you strike the wall beyond them, you will reveal a barrel which increases the strength of your armor by two levels. On the next platform above, you'll find the entrance to the stage's dungeon, shown below.
When you climb to the top of this portion of the stage, beware of the two Fire Demons stationed right near the top of the pillar. Note the POW waiting in mid-air and leap to it to easily clear the demons out of the area. Return for the zenny they leave behind if at all possible.
This dungeon consists of several levels connected via a long segmented pillar that climbs up the right side of the screen. As you climb each level, you must hop off to the left and explore each platform to find out what item (or trap) is waiting by the left wall.
Two plants on the first level above the floor, along with a third in the lower right corner, offer a chance to increase your zenny by 300. You will also encounter large spinning skull coins for the first time. These coins are invulnerable and cannot be destroyed. Your only strategy is to wait for them to move out of the way before advancing higher up on the pillar. Watch out for the snakes as well.
(C): When you make it to the second-to-last level, you'll notice a Fire Demon standing right near the dungeon exit. If you manage to attack the left wall, you can reveal a POW, which will eliminate the Fire Demon, making your escape from the dungeon that much easier.
(D): Upon reaching the top platform, you'll encounter a dead-end if you continue to the right. Above you are a series of tiny pillar blocks. You can jump up and grab one. The blocks are perfectly positioned to make it easy to leap from one block to the next and easily grab hold of them. It's worth checking out the long platform just above with the treasure chest and four pots before continuing your climb to the top.
(E): Right around this spot, you'll encounter the combination of a Spinning Skull coin and a Fire Demon. The coin can't be destroyed, and the Fire Demon may be just out of reach for your weapon. You'll have to time your leap up to the highest row of blocks such that the coin is out of your way, and the demon has just thrown a fireball in a different direction. Then proceed to the left to reach the green platforms below the ceiling. Two plants will be waiting for you when you reach the longer of the two platforms. Grab the POW at the far left to remove the Fire Demon waiting above.
Your journey continues from the bottom of the map below.
(F): You now begin the final ascent to the top of the stage. At this location, you may notice that your regular jump fails to give you enough height to reach the platform above. In order to make the jump, you must stand the proper distance away from the ledge, and hold up as you jump in order to leap a little higher into the air. Once you make it up, continue up to the next ledge. When you reach the right side, you'll have to hold up to reach the next platform as well. You'll find a boulder waiting to drop down on you, so be careful.
(G): Hopefully you've amassed a good sum of zenny because the captive here runs a shop. If you've been very thorough, and the difficulty setting is not too high, you should have enough to afford to fourth level weapon. If so, you should have managed to purchase a new weapon upgrade in every stage, and you will be well equipped to handle the challenges to come. The stretch from the fourth level weapon to the final upgrade is quite long, so it may take you a while to gather enough zenny to afford it. On your way up from here, beware of yet another falling boulder as you reach the level above.
(H): As you continue your climb to the top, be sure to visit this location and strike the wall. This will reveal a strawberry which, when collected, will enhance your current armor by four levels, and should not be missed. Above this area, you'll have one more encounter with a Fire Demon who is placed in a location that's difficult to hit. Unless your trying to maximize your zenny, you can safely ignore this demon, since the chest he guards is just a trap.
Boss: Blue Dragon
For the first time, you must face off with one of the three dragons mentioned in the intro of the game, which have wrought terror upon the kingdom. The first dragon you face is the blue dragon, and he is naturally the weakest of the three, possessing only three life bars. His only attack, other than physical ambush, is his fiery breath weapon which behaves a great deal like the Fire Demon's. You can stop this attack in mid-flight with your own weapon. You should focus on getting a good amount of distance between you two, so that you can turn around and strike the dragon's head. If he begins to approach, back up and get more distance until you are stuck against the wall. If this happens, you will have no choice but to try and head in the opposite direction. If you're lucky, the dragon will be high in the air when you need to do this, allowing you to pass beneath unharmed. If not, you will be forced to take some damage as you go through him. Hopefully it won't be enough to cost you your life. Once he's been struck enough to lose all three bars of life, he will be defeated, and you will advance to the next stage.