After the goblins explore the shipwreck, they move on to the nearby mermaid cave.
Move the Shell
Have 
Fingus go into the hole to the left of the bars above
the
octopus. Then have 
Winkle click on the shell in the
bottom-right of the screen. Switch to Fingus and have
him take the shell before it falls back down.
Get a Starfish
Have Fingus use the stool on the seahorse.
Then have Winkle go into the hole next to the bars.
Then have Fingus check on the cavity to the left of the
mermaid. Then have
Winkle check on the shell to trap the glove under it.
Then have Winkle check on the shell to get the glove
and a starfish.
Get a Pearl
Have Winkle take the stool, then use it on the seahorse
to go up. Have Winkle use
the glove on the blob (eyeball). Then have Winkle click
the bottle to get a
pearl. Give it to the mermaid.
Open Some of the Bars
Then have Fingus click on the bottle to get parchment. Have him use it on the
octopus.
Get a Sword
Go back to the shipwreck.
Have Fingus stand to the left of the rudder (the wooden
wheel) of the ship.
Have Winkle click the lantern near the rudder,
then have him stand on the
shell near the bottom-right of the screen. When he is on the shell,
have Fingus use the
rudder. Winkle will be launched up to the area behind the
statue on the end of the ship.
Have Fingus climb the ladders on the right side of the
screen so he is standing on the spot to the right of the
statue on the end of the ship. Then have Fingus use the starfish
on the chest. Wait for
the chest to open, then switch
to Winkle and have him click the statue on the end of the
ship. You will get a sword.
Get the Diamond
Have Fingus use the sword on the skull. Get the diamond.
Use the Diamond
Go back to the mermaid's cave, pick up the stool, use it on the seahorse, then use the diamond on the mermaid.
Get the Glove
Have Fingus take the glove off of the tentacle on the left.
Get the Stool and Go through the Door
Switch to Winkle,
pick up the stool, and click on the door that opened next to the octopus, and you will arrive
in the Kitchen.