After a brief visit to Izumo, you find the gate that leads to the Dragon Pond where the White Mirror awaits.
Warlock Zone VII: Dragon Pond
Go to the right and talk to the Tanuki statue to enter the zone.
Go to the right and there will be some birds flying overhead. These first birds don't drop bombs like the crows in town, but you'll get hurt if they hit you. Try to hit them if they are on a collision course with you.
Go to the right and jump onto the boat. It will automatically move to the right. This time, the birds will try to drop stones on you, so move left or right to dodge them, but don't fall out of the boat or you'll start to sink and take damage. You can press the jump button to try to jump out of the water and back on the boat.
When the boat stops, you'll be at a pier. Jump out onto the pier and keep going to the right. There will be birds that drop stones onto the pier (or onto you if you don't get out of the way). Jump over the stones or wait for them to disappear. There is also a fish flopping around on the pier.
At the right side, there are floating wooden platforms that break apart when they hit the pier. Jump onto one of them before they reach the pier, then jump from platform to platform until you can jump onto the floating platform above the water. From there, you can see a floating platform on the left that has a crab walking back and forth, as well as two pots. You can use coins, bombs, or the yoyo or other ranged weapon to hit it, or you can just wait for the crab to go to the left side of the platform, then jump up and hit it. The pots contain a golden cat and $50. Go back down and use the platforms in the water to reach the next pier.
The bridge here will collapse when you step on it, so you might want to jump across using the floating platforms instead. If you do fall in, just press jump to get back out of the water.
To the right, there are floating barrels in the water. Jump on one and it will be pushed downward. Jump to the next one, let it go all the way down in the water, then jump up, and as soon as your feet touch the now-higher barrel, jump again to reach the barrel on the right. Hit the crab, then jump onto the wooden platform on the right. If you can make it to the top level, you can hit the pot to get a lucky cat.
To the right, there are four barrels side-by-side. Make your way to the right by jumping from barrel to barrel, then get off at the pier on the right. Hit the pot to get a checkpoint elephant. Go to the right and hit the fish.
Go to the right and jump onto the large hollow barrel. If you stand to the left of the center of the barrel, it will move to the left, and if you stand to the right of the center of the barrel, it will move to the right. There is a brief delay before the barrel changes direction. Hit the fish that jump out of the water and make your way to the right. Get on the pier on the right.
Next, there are some floating red orbs in the water. They move down into the water when you land on them, so you have to jump as soon as your feet touch them to avoid getting in the water and taking damage. Be careful to avoid the birds as you go to the right. There is a small wooden platform in the middle. When you reach the right-hand orbs, you can try to jump up and down on the middle orb to help you reach the floating platform up above. From there you can jump to the pot, which contains a golden cat.
Keep going to the right and you will find some floating wooden platforms in the water. These platforms stay where they are when you land on them, so take your time to hit the fish between them and jump from platform to platform as you go to the right. After the final platform, there is just water. If you have the flying Jutsu, you can use it to reach the right side. Otherwise, make a short hop into the water, then jump to the right until you reach the right side. (If you try to make a long jump, you will probably hit the bird on the right side when you try jumping out of the water.)
Hit the crabs and birds, and go to the right to reach the boss of this area.
White Dragon
The White Dragon, Hakuryu, has to test you before he allows you to go past. His head is vulnerable. He will appear on the left or right side of the screen, so stay in the middle until he has appeared. He will spit three fireballs out at different angles, and the fireballs will explode when they hit the ground or the side of the screen. You need to avoid getting hit by the fireballs and also avoid being near the explosions. After spitting several sets of fireballs, he will go back down below. When he is about to go down below, he will stretch high up and tilt his head back, so when you see him do that, start running away.
You can stand very close to him and hit him with a ranged weapon (bombs are especially good because they hit him twice), but if he is moving his head low to the ground, be sure to get very close to his body to avoid getting hit.
After you defeat the white dragon, you learn from the White Mirror that Princess Yuki is in Ryukyu.