You need to talk to Tao in Gola Highlands.
The Road to Sniff Master
Tao tells you that you have trained hard, and now you need to go and look for the Sniff Master Medal, which is deep inside Kunka Ruins. To get inside the ruins, you need a key. But he tells you not to worry, as he has it. He gives you the key, and then you need to go to Rune Canyon.
Go along the path (or along the side of the level, as the path is guarded by lots of Buffalo) and you will come to some steps. These lead to the Kunka Ruins. But before you go in there, turn right (when facing the ruins) and go to the fishing pier over the pond, as you will need to catch an Ancient Fish. It will come in handy later.
The Mysterious Board
Upon arriving at "The Mysterious Board," Petasi will state that you should smell it. Note that it smells "fishy." If you haven't already caught an Ancient Fish and brought it with you, you'll have to leave the ruins to get one in the small pond nearby in Rune Canyon.
Upon placing the fish on the board, the door should open and you're free to go down to the first floor.
The Closed Door
First, a warning: Be very careful because there are cobras at every turn down here!
The Pink Cobras don't turn, so just run by them or lure them out and bark at them when they go back into position. As always, use Medicinal Herbs if you need them.
The closed door is located at the far rear wall, which can be accessed via the two corridors next to the ramp going back up to the second floor. On either side of the rear wall is a carved pillar. You will learn two scents: the Silver Dog Statue scent and the Gold Dog Statue scent.
The Gold Dog Statue is far easier to find. It's right next to the room with the closed door, but you'll have to find the switch to open it first. Head to the northeast corner of the room and dig at the door to learn the scent of Door A. The switch is in the room at the end of the southeast hallway. Once you've found it, the door will open and you can go back and dig up the Gold Dog Statue.
The Silver Dog Statue is a bit more complicated. Take a good look at the other side of the map. You'll see another room on the left that appears to be a dead end. However, between that room (which is greenish in color on your map), and the corridor below, there's a black space. That black space is where the statue is found. What you'll have to do is run past the cobra guarding that green room through the vines on the wall into the secret room. There, you'll find the statue.
Now you can go back to the closed door, place each statue on their respective pedestals, and the closed door will be opened. Enter and find your medal by sniffing it in the middle of the room.
The Sniff Master
You will be taken to Tao's location automatically, where he will designate you as a Sniff Master. He also finally raises your level, giving you an additional two hearts. You can now take your medal up to the Rune Caverns and place it in the carving there to open the way to the Ancient Grove. Head back there to find the Legendary Flower.
Where is the Legendary Flower?
If you sniff around the Ancient Grove for a while, you're bound to find it, but you first have to find the petals, which are pretty easy to find. There are many different fish which you could not get anywhere else along with the regular ones, and you can get every type of flower here as well. The Ancient Grove is also the spot of the last bug, the Morpho Butterfly.
Once you find all the petals, a cutscene will appear showing your dog finally locating the Legendary Flower. But Petasi notices something wrong with the flower. Then you realize what the problem is... it's wilted.
Once you have done everything that you wanted to do in the Ancient Grove, report back to Tao, and he will give you three more hearts, thereby maxing out your health. You can actually do this any time after he upgrades you to Sniff Master, but this is a pretty convenient time to redeem the rest of your hearts and the title of Grand Sniff Master.
To the Anc Road
After touching the big tree in Green Meadows, a Sky Whale will appear from the Anc World and cause havoc in Pupsville. You and Petasi teleport to Anc Road to find out the cause of all this. You will arrive in a large cavern with a locked door and two big ponds, one of which contains an Alligator. It is best to get the Potan's Medicine by the door first. Running past the Alligator, you will reach a large square of gray blocks, which will collapse under you if you step on the wrong one. Sniff the blocks to find the safe path across.
The Pink Cobras on the other side have extremely low sensitivity, so just run past them. After doing that, Petasi will ask you what that smell is. It is a Pretty Red Flower. Head toward the big cave, but be careful, because there are a few Bats there, and dig up the flower at the back. Place it on the pedestal, and you can teleport to the next area.
Here you will see four blocks and a slab of stone in the middle. Go to the stones and dig at them in this order:
Hop onto the transporter and you will arrive at a cave-looking area with a door to another cavern. There are two switches; one near the door and one at the back. The one near the door is unfortunately a false switch, so save time and run to the back, away from the steps, and sniff. You will find a switch to open the door. Flip it and run through the door at the front. Go down the path to the next teleporter.
Next you will be back where you started, but at the far ledge behind the Alligator. Hop onto the teleporter next to you and the door to the queen's room will open up! Now just jump down and swim over to the door and see what the Anc Queen has to say.