You'll quickly see a new miniga who says he's lost the key to his house. Move forward to the right to try and find it.
You'll encounter Blobs that fly up and try and crush you by landing on you, don't forget you can aim up.
The Key isn't very far in, it's very possible to bolt in and grab it. Take that back to the mimiga you saw at the start.
He'll invite you into his house which has a Health and Save station, but will also reward you with the Fireball weapon. It launches bouncing projectiles affected by gravity, and is great on hills (like in this area), so try and level it up.
Progress a bit further into the bushlands as told by Santa and you'll find some insta-kill spikes you were warned about in his house. You WILL fall through the ground into them, so jump over the pit.
Enter the house at the end of the path and examine the fireplace. The Mimiga in there will inform you that you'll need Jelly to get through there. Exit the house and go back to where Santa's key was to find a big Jelly. Kill it to receive some Jelly. You can only have one at a time, but you can come back for more later.
Instead of going back to Chako's house, go into Santa's house instead and use the Jelly on his fireplace to get some Charcoal, you'll need this later on. Grab another jar of Jelly on your way back to Chako's house.
Side note: If you take a Jelly back to the Mimiga Village and use it on the fireplace there, you will find a completely optional weapon called the Bubbline. It sucks at lvl 1 and 2, but it's amazing if you get it up to lvl 3.
When you finally get back to Chako's house and use the Jelly on her fireplace, you will be let through to the other side of her house. The fire will be re-lit, but you can now continue onwards.
The next area will have annoying totem pole-like creatures sprinkled along the ground that shoot in the direction they face when shot. Make your way to this shed and examine the crack in the wall.
Someone is trapped in there, and if you agree to help him out, he'll give you a key you need to progress. Try and use it on the door to find it has no keyhole, and then talk to the crack again to think of some other way to force it open.
The Key does however open the door to the power supply at the bottom left of this part of the map. Head in and turn the power on to be confronted by a defense robot!
Or not, as the robot is quickly squished by the randomly room crashing Balrog who will be fighting you instead. He's the same boss from before, but this time he shoots out a few slow projectiles.
If you grabbed the Bubbline and levelled it up to 3, you can destroy this boss with it, as when held the bubbles will act like a shield that will destroy any of his projectiles, as well as being launchable at him directly.
Contrary to what you might think, after beating Balrog, talk to the now crushed robot and help him out. He'll compliment you as being a good person and offer to help you out. He only knows how to make bombs, but with that rusted door, this is exactly what we need. You need some Gum base, Charcoal and Jelly to make the bomb, but you should already have 2 of those things.
Now all the fans are turned on, allowing you access to this save room, but also the room with the Gum Base. Once you've saved and healed, Check up with the guy stuck in the shed.
Talk with him through the crack again, and you'll let him know of your bomb making plan, and that you need gum base. He'll give you a key labeled 'Gum Base' which is needed to go and get it. Then head to the far right.
Watch out for the spikes bellow, and hold the jump button while being blown by the fans to make the distance needed to clear this mini puzzle.
Inside you'll easily obtain the needed Gum Base, but will quickly be prevented from leaving by the Doctor's goons.
After a mini series of events, Misery will transform Balrog into Balfrog to make sure you get crushed.
You need to shoot him when his mouth is open to hurt him. Getting up super close with a level 3 Fireball will do a ton of damage. When he starts to corner you, use the fans to jump over him.
After beating him, take the three items to the robot and make the bomb, and then plant it at the rusted door for the shed. It'll blow and up and free Kazuma from the opening cutscene (also Prof. Booster) who leave for the Village.
Make your way all the way back to the village for some story.