We take on the last area of the dungeon beneath the restaurant, then find out what all those ghouls were released for: an ugly belt.
Now for the last area, which is opposite the door we entered last time. Jump on the floating platforms and watch where they go so you don't fall into the abyss. You'll be dealing with a lot of Vambees here, too.
You'll see some puzzles where you have to move a red block. Move it to the glowing red eye to continue on. Thankfully, the eye block puzzles aren't that hard.
The white cubes will either run into you or crush you. You obviously want to avoid them.
Jump down and left on that platform that slowly rises up and down.
After that part, you'll enter a maze area. Assimilate the nearby ghost to get the temporary Sublime ability. You'll have an out-of-body experience where Musashi's soul jumps out of his body, allowing you to fly through the maze and memorize the path through this maze, because once you return back to your body (either after taking damage or after enough time has passed), the room will get dark and those dark brown squares in-between the lighter ones won't be there. When I played through this game, I didn't even know you could do this, so I just jumped from one platform to the next and hoped I landed on the other side.
After crossing the upper road in the room where you started, you'll reach another maze. The Bincho Field here contains Carpenter Cubey. The chest here contains a Bedpan, but you won't find out it's a Bedpan until you appraise the item inside. Take it and get the cash.
In the next room, you'll be dropping down in a darkened area, trying not to hit any spikes. Luckily, this part is even easier than the mazes.
You'll soon reach another maze. There is an area where you drop down. Take it and you'll save Knight Chucks, who will have another technique for you if rescue him from the Bincho Field. You'll then be able to teleport to the end of the maze after you rescue him. The chest you'll find in the maze on the way here contains a Helmet, which is going to be another useless item.
Now break the eye and get outta here!
Now that you've smashed all four eyes, you can now head to the door behind Mannick.
When you return to the eye door, you'll find out Mannick is missing. Inside the door is a treasure box, which is the reason why Mannick bought the restaurant but also let the ghouls out. When he opens the treasure box, he finds an ugly belt. After chastising Mannick for putting the village in danger and especially for putting Hilda and her son Tim through hell, Mannick promises to change his ways and hands Musashi the UglyBelt.
But first, head back to the castle. Talk to KnightB (Knight Lardwick) to learn Crosswise Cut, assuming you haven't already. Tap Triangle, then Square for a double sword attack. After you've talked to Knight Lardwick, talk to KnightC (Knight Chucks). You'll learn Desperado Attack. Press Square, Triangle, Square, and Triangle to do a devastating attack.