Flying and Flower powerups are useless! All you really need is to be 'big' Mario with a backup mushroom. This level is basically a ghost house, but underwater! This course will take quite a while to finish and never jump a head, you may die a few times but this will help you get used to the course!, them ghosts are bluddy annoying!
Swim to the right, and hit the ? block that's above the Bullet Bill machine to get a powerup. Go up and right, then down after passing the crates, and enter the yellow pipe to the right to go down inside the ship. Inside, swim up and right while avoiding two passing ghosts. When you reach the crates, then ghosts will appear from nowhere. You will see them just before they appear and can hurt you, so then go into a position so that you don't touch them, and go onward right. After a while some ghosts will come from the right, so watch out for them, and carry on. When you see a normal Boo, then the ghosts that appear from nowhere will stop. Keep an eye on the two Boo's here, and enter the circle of Boo's when you can, and exit at the top. Enter the one to the right, then exit below so you can enter the pipe.
Now you will drop automatically and collect a Starman to make you invincible. Keep falling and collect some items on the way. Stay to the middle and you will land on a platform; renew your invincibility status here by hitting the block and collecting the starman. Keep falling onward to the bottom, where there is water and a island in the middle. Walk into the green circle with the ? on to complete the level, and to unlock the opening to the Valley of Bowser.