In order to access this secret stage, you will first need the key to the castle basement, which is gotten after clearing Bowser in the Dark World. In the main room you find upon entering the castle, go through either wooden door and down the stairs. Enter the locked door there to find the basement and head down the hallway, going through the wooden door at the end of it. This will put you in the area with a few other courses, but you’re looking for another wooden door in this section.
It will be to the right of the painting for Lethal Lava Land, as well as not too far from the door leading to Hazy Maze Cave. Through this wooden door, there will be what looks like a small pool of water. Dive down and swim through this to the other side, where you will find two pillars, of sorts. You will want to Ground Pound both of these pillars, causing the water to drain not only in this room, but also in the moat surrounding the castle. The door right next to the pillars actually leads to the now-drained moat. On the other side of the bridge, in the drained moat, will be a hole that leads to the Vanish Cap level.
Vanish Cap Under the Moat
The Vanish Cap level is pretty straightforward and more of an actual than the Wing Cap one. Despite starting out with the Vanish Cap already equipped, you don’t need to worry about it until the end, so you can let the timer run out if you want. You begin the level on top of a large slope, which will have little platforms scattered about. Some of these will contain Red Coins, four to be exact, so you will want to be mindful of where you’re going as you descend. The first two ledges will have two Red Coins, then the last two will be near the end of the slope.
Once you’ve collected the Red Coins, slide to the bottom, making sure you don’t go off the edge here. You will see little black orbs at the bottom, which will shoot fire upon getting close enough. These are called Keronpa Balls and they will be present throughout this secret level. For now, round the corner and continue the level until you reach some vertically moving platforms. These are generally safe to ride, but they will rotate at the top of their path, so be prepared to jump before they reach that point.
After the first set of moving platforms, there will be a seesaw and two more Red Coins will be found here, with them being in the air above each end. There will be another three sets of moving platforms beyond this seesaw, with another Red Coin in the air when jumping from the second to the third. The Blue Switch for the Vanish Cap is just past that last set of moving platforms, as well as the final Red Coin. Hit the switch to unlock the Vanish Cap across the game, then use the block near you to don one of them. This allows you to pass through some walls/grates, so do just that to reach the Power Star from collecting the Red Coins.