After getting through Midoro Palace, go east until you reach the dirt path, then go south and east, break the boulder, and walk to Mido Town for a heal-up if you need it.
Then head south into the graveyard. There is a single grave in the middle of an open space. This is King's Tomb. Head south from King's Tomb and eventually you will fall into a hole. Be sure to hold the down button so you do a downward thrust, because it is likely that there will be Lowders directly below you.
Go to the right and cast the Fairy spell to get over the tall ledge. In the next room, you must fight a Myu, two Lowders, and a Goriya. Then you will be outside. Go to the northwest to find the Island Palace.
Hit the statue to try to get a red magic jar. Then take the elevator down. There is a Doomknocker in this room who throws mace-shaped boomerangs at you, as well as a Myu and a helmeted Blue Stalfos. You can avoid all of these if you cast the Jump spell and walk along the elevated bricks.
In the next room, kill some Tinsuits and Myus. The next room has a Moa flying around dropping flames, as well as a bunch of bricks falling from the ceiling. Remember: if two bricks are stacked on top of each other, the top brick won't fall if you break the bottom brick. Use this to safely tunnel under the bricks after they fall.
In the next room there are Myus and a Doomknocker. After defeating them, use the downward thrust to break through the bricks and get the key. The P-Bag has 100 points in it.
The next room has some Red Iron Knuckles behind some bricks. Just jump over the Myus and ignore the Iron Knuckles.
You will soon reach an elevator, but don't go down it yet. Instead, jump through the wall on the right. You will find yourself outside, where an orange Moa and a red Iron Knuckle are guarding a key. After you get this key, go back and take the elevator down.
From the elevator, the statue head to the left has a secret red magic bottle in it, so use the Jump spell to get it if you need it. Then go right through the locked door. There is a Bot, and some floating statue heads. The statue heads follow a simple pattern: float up, spit energy, float down, spit energy. Watch for the energy balls and then kill the statue head when you get close, or just run past.
In the next room, there is a wall of bricks. Break through it, making sure to jump and break the third block. Then wait for the Bot to throw itself into the lava. Jump over and get the key, then hit the Red Iron Knuckle as you inch toward the right. Eventually you should be able to knock the Iron Knuckle into the lava. Wait for the Bot to jump into the lava, then jump over the final lava pits. Break the bricks and go on to the next room.
You will fight a red Iron Knuckle, then a blue one. The blue one throws knives at you, so be really careful. Then unlock the door on the left and pick up the raft.
Go back the way that you came, going past the elevator. There is a red magic jar hidden in the statue head on the left, so use the Jump spell to hit it if you need it.
There are floating statue heads here which follow the same pattern of float up, spit energy, float down, spit energy. Get past them and you will find a red Iron Knuckle. Unlock the door behind it, then go past the elevator.
There are Tinsuits here and a red Iron Knuckle. In the next room there are more floating statue heads of the float up/float down type. There is a key under the bricks on the left side, so break through and get the key.
Return to the elevator and go down. Unlock the door and go to the right. Use the Jump spell if you want to avoid the red Stalfos and Doomknocker on the floor. There is a 100 point P-Bag on a platform in this room.
The next room has a maze. The safest way through is to go up to the third level in this room, break through the bricks, then use the downward thrust only on the bricks on the right side. You will only have to fight the red Iron Knuckle. However, there is a 100 point P-Bag on the lower level that you can reach if you break all of the bricks on the lower level. Otherwise, move on to the next room.
Here you will find the Rebonack (I think it's supposed to be translated as Levoknuckle: levitating Iron Knuckle). It waits at the side of the room for a moment before charging toward you. Use the down thrust when it charges past. Eventually it will get off of the ghost horse and be a normal blue Iron Knuckle, throwing knives at you. Fight it like you would a normal Iron Knuckle.
When you defeat it, get the key, then walk past the statue to put the crystal in place. Then use the exit on the right to get out of the palace.
Now that you have the Raft, you can go to eastern Hyrule. Your first stop there should be Nabooru Town.