The goblins visit the well in the castle in the hopes of finding a way to make an imprint of the key in the courtyard.
Get Things from the Forge and Courtyard
Be sure to get the stool from the forge, and the false teeth from the castle courtyard before you continue.
Reveal a Door
Have 
Winkle go into the tunnel in the bottom-right of the
screen. He will press a button and reveal a door in the giant green monster.
Open the Door
Have 
Fingus stand to the left of the hatchet, then have
Winkle use the hatchet. Switch to Fingus and have him push the button that was behind the hatchet.
Scare Schwarzy
Have Winkle stand near the door in the giant green monster.
Have Fingus go into
the tunnel,
then switch to Winkle and have him
go into the door in the big
green monster. While the monster is talking, click Fingus to switch to him, then
use the stool on the hoist to the left of Schwarzy (the guy who is holding
the rope).
Scare Schwarzy More
Then have Winkle use the false teeth on Schwarzy.
While Schwarzy is holding up the lid, have Winkle use the
anvil on Schwarzy.
Go to the Sunken Ship
Then have each of the goblins use a diving suit on the well. You will continue to the Sunken Ship.