The Buffoon seems possessed, so Tazaar takes him to his laboratory and asks the goblins to fetch water from the fountain.
Use the Fountain Water
You have fountain water in your inventory, so
use the fountain water on
The Buffoon.
Get the Pencil
Get the pencil from the shelf above the blackboard.
Get the Boomerang
Have 
Winkle stand next to the armchair near the left side
of the screen.
Have 
Fingus use the pencil on the portrait and
have Winkle jump on the armchair. He'll
get the boomerang.
Get the Toothpick
Have Fingus stand near the lowest corner of the rug
in the middle of the floor.
Have Winkle use the mug on Tazaar.
Have Fingus use the boomerang on the toothpick that
bounces in the left part of the screen. Then have him pick up the toothpick.
Use the Toothpick
Have Winkle use the toothpick on the skeleton.
A jar will fall out and break.
Get a Sponge
Have Winkle use the pencil on the blackboard multiple times,
and eventually Tazaar will throw the sponge. Pick it up and
use it on the puddle.
Open a Portal
Have Fingus stand to the right of the pipe,
then have Winkle click on the pipe, then have
Fingus use the wet sponge on the smoke.
A portal will open. Have both goblins click on it to reach
the underworld.