This is the easiest level in the game, so you shouldn't have too much trouble. At the beginning, be on the watch for an item ship. This has a claw. After nabbing the claw, stay towards the top of the screen while plugging away at a few minor enemies. Going to the bottom of the screen runs you into an unnecessary mini-boss. If you stay towards the top near the mountain peaks in the background, you should soon spy another item. This one's a Blade. Large ice-nagas will soon jump up at you from the water, so be on the watch. Don't bother trying to kill them. They cann be killed, but it is extremely difficult as their only weak spot is their faces.
Stay near the mountain peaks, and you will soon find another item: the Rail Gun. Shortly afterward some small enemies will close in on you from above and below. Go to the middle of the bottom row and shoot the front ones with your Blade, then switch to your newly acquired Rail Gun and blast the ones behind you. Switch back to Blade and shoot the top row from behind, then duck some missiles that come from above and behind you and kill the guys who launched them. Fly to the bottom of the screen and switch to Rail Gun to blast the mini-boss that comes up from behind near the water. Slowly blast away his sections, and if he launches some guys from his back, take a small detour upward to kill them with the Rail Gun. Once all of his sections are gone he will start launching homing missiles at you and fire an infrared beam forward (don't worry – the beam can't hurt you directly). You have to shoot the part of his body where the beam comes from to kill him. One problem… if you touch the infrared beam, he fires a spread of lasers straight at you. The best way to do this is to make quick passes past the beam using back shot or Rail Gun.
Now time to take a breather as you descend underwater. Watch for a 1-up in the middle of the screen, and shoot the multiplying ships. Avoid the Alien Battlecruiser as it comes at you from the front and blast or avoid the missile-launching ships and guys that fly up from the bottom of the screen. As the Battlecruiser flies away, be sure to nab the claw item near its engines. Once above water, fly upward to avoid being sucked back down, and don't run into the Battlecruiser as it flies past. When you get underneath it, avoid the tail and either avoid or shoot the fireballs. If you have a claw, select Twin Shot or Blade and hide in the very bottom-left corner of the screen. Keep 
pressed down and all of the fireballs should get destroyed. When the tail gathers a ball of energy, fly upward to avoid getting hit when the tail swings forward. Blast the fireballs and meet the stage boss: GargoyleDiver.
To defeat this rather easy boss, simply shoot at the blue core in his stomach. Be careful to avoid the additional fireballs and getting hit by his tail when he swings it. After a while he will dive underwater and shoot his core up at you (it will turn red). Avoid the core, as you cannot hurt it when he shoots it at you, and continue to blast it when it is retracted. Continue to attack him when he resurfaces. His most dangerous attack is when he shoots 3–6 foam clouds at you in rapid succession. You can tell he's about to do this when you see a small white puff in his mouth. Just keep blasting the core and he should go down eventually.