You will first appear on the shore of a decently sized lake upon entering this level. In front of you will be the waters and this star will involve you going swimming. It’s important to remember that your health bar functions as your breath meter when underwater in this game, so if you find yourself in need of health, then either collect coins or return to the surface. For now, jump straight into the water and go straight out from the entrance, until you get to the very deep part of the stage.
Dive down to the bottom, where you should see a sunken ship, which will be your destination. Look closer and you will notice that there is a head sticking out of the ship. This is the Unagi and you need to lure it out of that hole it’s hiding in. Get very close to it, preferably underneath it actually, then swim away (maybe to the surface to replenish your health). If done right, whenever you go back down, the eel will be swimming around the ship, allowing you access to the hole. Swim inside the hole to enter the sunken ship, which is also filled with water.
One of the first things you will probably see in the sunken ship is some chests. These chests are the key to getting the Power Star, but they have to be opened in the correct order. If you pick an incorrect one, you will be shocked and lose some health. Choose the right chest, though, and it will open, releasing an air bubble you can use to replenish your health. The first chest that needs opened is the one that’s farthest from the others, against the wall of the ship.
When facing the other end of the ship, open the chest on the left first, then the right and finally the one in the middle. As soon as you open the last correct chest, the water inside of the sunken ship will begin receding. The star is located in the yellow box at the top of the slope, so you will need to use the various platforms to reach the top and net yourself another Power Star.