To acquire the next element, you have to go to Castor Wilds, and from there to the next dungeon.
Castor Wilds
Walk in a little ways to hear from Ezlo, then try to walk in the swampy mucky part, and step back out. Ezlo will tell you you're not equipped to get through here, so head back to Hyrule Town.
Hyrule Town
Kinstone fusions now possible:
Postman
Candy (pigtailed girl on second floor of inn)
There is a red Kinstone piece in the bottom right pot on the top floor of the inn.
Once you fuse kinstones with the postman, the guy in the post office will start a newsletter. Go to the post office and Marcy will be there (if not, leave town and go back in). You can buy issues of Swiftblade's newsletter from her for 200 rupees per issue. Once you pay 200 rupees, you can leave town and go back in to make the new issue appear. If you feel like it, get a couple issues, as that's all you can afford for now. The newsletter is not necessary to beat the game, but if you feel like being complete, go for it.
Now, head to the shoemaker's place (there's a big shoe on the roof). The shoemaker will fall asleep and a pair of shoes will fall off the counter. This gives you access to the counter if you use the pot in the corner to shrink and climb the ladder up to the countertop. On the counter you meet Minish who say they will give you the Pegasus boots if you can wake the shoemaker so he can finish the boots, with a potion from Syrup. The Minish mark the location on your map. It's in the Minish Woods, and the way there is through Lon Lon Ranch.
Lon Lon Ranch
Go into the fenced area where Malon and Talon are hanging out, and go up a bit to a shrinking portal. Use it and go into the house through the blue arch. Grow to normal size, break all the pots to find the key, then shrink again and exit the house. Grow at the stump above, then talk to Talon to give him the key and he'll go in. Follow him in and go through the house to the pasture area. If there are stairs leading down in the pasture, take them and get the bigger wallet. In the left part of the pasture area is a door, inside you have to split in two to push up the block and reach the chest (50 rupees). There's nothing up the ladder here, but there will be later, so just leave it and go back out to the pasture. There's a Minish path here, but there's no shrinking portal around... yet.
Exit east to an area of Lake Hylia.
Lake Hylia
Follow the path here to get to Stockwell's house. Shrink down to small size and go up to the dog, who will fuse a Kinstone with you. Return to Lon Lon Ranch.
Lon Lon Ranch, part 2
From here go north and follow the path. Before using the Cane of Pacci on the hole, push the rock into the hole further west so you can reach this area more easily later. Then use the cane on the hole and jump up to the ledge. Shrink at the portal, and walk east across the plank to a crack in the ground, where you get a red Kinstone piece. Go back across and grow again. Use the whirlwind to float directly south to the next ledge. Follow the path to another whirlwind, and use it to float south over the water. From there it's a clear path to Lake Hylia.
Lake Hylia, part 2
Follow the path down. First, exit left to Lon Lon Ranch, and all you need to do here is push the rock into the hole to access this area more easily later. Then go back to Lake Hylia and south to reach the Minish Woods.
Minish Woods
If you did all the first 22 Kinstone fusions, there will be a golden octorok here. It moves slowly but rapid-fires rocks at you, and it takes a ton of hits before it dies. Your reward for beating it is 100 rupees. Also if you did the fusion, if you head west there will be a chest containing a blue Kinstone piece. Below that is a piece of heart.
Head back eastward, find the steps up and follow the path to Syrup's hut. Buy the Wake Up Mushroom for 60 rupees. Now make your way back to Lon Lon Ranch.
Lon Lon Ranch, part 3
Once you're back at the ranch, you can go up the nearby stairs and hop into the whirlwind. Head west and a little north, and push against the ledge to the left. It will look like you're too low to make it, but if you're positioned right you'll float up onto it. Drop down the ledge to the south and you'll find a Goron trying to break into the cave. You can fuse Kinstones with him to cause a Goron to come to Hyrule Town to sell Kinstones. They are really expensive, but you might find them useful.
To get out of here, you have to push the rock into the hole to the right. This gives easier access to this area for later in the game.
Make your way to Hyrule Town.
Hyrule Town, part 2
Go back to the shoe place and walk up to the counter and press R. You'll use the mushroom and the guy will wake up and give you the Pegasus boots. You have to equip them to a button to use them. Hold the button and you'll dash.
Now go to Swiftblade, who has a new technique for you to learn.
There are several Kinstone fusions you'll want to take care of before moving on. First, head for South Hyrule Field.
South Hyrule Field
If you haven't already, step on the warp tile north of Link's house to reach the house where Gregal and the ghost are (or were). If you didn't get rid of the ghost before, check the "Path To The Next Element" section for how.
Go to Link's house, and fuse Kinstones with Smith. Then leave the room and go back in, and he'll have another to fuse. While in the South Hyrule Field, go to the eastern part of the area and there's a hole to use the Cane of Pacci on. Get up on the ledge and fuse Kinstones with Tingle. BE SURE to talk to him again to learn about his brothers, to make them appear around Hyrule.
Go north and exit right to get to the Eastern Hills.
Eastern Hills
There should be a chest here, it contains an empty bottle.
Go up and around to where Eenie and Meenie are working in the field. Both of them have Kinstones to fuse, so do it.
Now head north to Lon Lon Ranch.
Lon Lon Ranch, part 4
If you didn't go to the Goron Cave area earlier with the tornado, do it now. See above for how to do it, and fuse Kinstones with the Goron there.
Go through the house to the pasture area, and go through the door to the upper left of the pasture. Split in two to push up the block, then go up the ladder and fuse Kinstones with Ankle. If you didn't talk to Tingle after fusing with him, Ankle will not be here.
Now that you have the Pegasus boots you can dash attack the sparkling tree, and the leaves will fall off and it will turn into a shrinking portal. Shrink and go into the Minish path (small dirt path to the right) and go up to find a chest containing a red Kinstone piece. Go up further for a piece of heart.
Grow back to normal size and find the northern entrance to Lake Hylia (the one that took you to Stockwell's house with his dog in it).
Lake Hylia, part 3
Take the stairs south of Stockwell's house to find David Jr., who will fuse Kinstones with you. If you didn't talk to Tingle after fusing with him, David Jr. will not be here.
Now head for Trilby Highlands.
Trilby Highlands
Go to the southwest area to reach the tree hut. Inside, fuse Kinstones with Percy.
There are a bunch of Kinstones to fuse on Mt. Crenel. I think you can wait until you have an item later that will make it easier for you reach Mt. Crenel, but I'll give you directions on how to get the fusions now.
Mt. Crenel's Base
In the first screen, go up until you reach the climbable wall, and go up. Then go west and down until you reach a vine (it's the one that grew with the green hot spring water). Go down, and go right to shrink, then go into the crack in the ground and fuse Kinstones with the Minish. You can go ahead and open the chest that appeared now, check the map to reach it (200 rupees).
Now go back up the vine you came down on. You want to make your way to Melari's Mines. But first, take the climbable wall to the left and go up, there should be a chest here on a ledge. Get it (blue Kinstone), then go back down.
Head all the way east and keep climbing up the rock walls until you reach a door. You may have come here before, it's Grayblade's dojo. If you didn't train here yet, do it now. See above for how to get in.
Head west and up some stairs to reach a hole where you can use the Cane of Pacci. Jump up on the ledge above. Shrink and enter Melari's Mines.
Melari's Mines
Fuse Kinstones with the Minish standing by where you entered. Go down from here and into the door you see. Fuse Kinstones with Melari if you have the matching piece. Go back out and head east, then go up and fuse Kinstones with the Minish by the door. Go up from here and fuse Kinstones with the pickaxe Minish at the far left.
You may want to go around and collect all the stuff that appeared from the Kinstone fusions. The easiest way is to exit the mines via the west exit, go straight down to the next screen, then west to the rock wall that takes you to the big rock wall. Climb up to the next area and you reach the beanstalk to the left. Up there is a piece of heart and a bunch of rupees. Go back down.
Now you want to get to the Minish path where it's raining. Use the mushroom to the east to get over to that side. Shrink down and get into the path and open the chest for a blue Kinstone piece.
Now you can go back to the base of the mountain, use the mushroom to get back to the other side and start heading down. There may be a Golden Tektite down below, fight it if you want a bunch of rupees (and can handle getting hurt a lot).
Make your way to the Western Wood, and up to Castor Wilds.
Castor Wilds, part 2
Dash west to the area of safe ground, then south to another area.
Staying on ground level, go a bit north and west and you reach a door. Follow the path inside and you reach a room with a chest, but it disappears and a Darknut appears. To defeat it, wait for it to swing its sword (try to stay at a safe distance) then strike when its sword is out. Once it's defeated, the chest reappears. Get it for a gold Kinstone piece. Go back outside.
Only one way to go now: up. Take either of the two accessible vines up to the upper level. Head north and you get to a platform with a vine leading down, so climb down. Go up, and you find a one-eyed statue that you can't do anything about yet, and further north is a door. Inside, use your shield to stop the business scrub. It wants to sell you arrows but you don't have a bow yet. However, you can fuse Kinstones with it, so do it. Now go back out.
The only way you can go is west across the swamp, so dash across. You'll have to change directions a lot to get around the obstacles and reach the ledge at the northwest. Shrink, and go up through the Minish path to the left. To get across the water, hop on the lilypad, equip the gust jar, and tap the button to blow gusts and propel yourself upward and around the obstacles. When you reach the other side there's a hole to drop in.
Inside are blue monsters dashing around. Swing your sword like crazy to beat them. When they're gone, a big chest appears. The bow is inside! Now that you've got the bow, go back out to the shrinking portal and grow to normal size again. Dash back across the swamp.
Just above you is a one-eyed statue. Shoot its eye with the bow and it'll start moving. Keep shooting its eye until it's dead. Now the vine that was behind it is accessible. Don't go up it yet, instead, head southeast and up a vine. Continue southeast and you reach another one-eyed statue. Beat it as before, then dash across the swamp that was behind it. You reach a door, and inside is a chest with a gold Kinstone piece inside.
Before moving on, go south from the door and under the bridge above to reach a rock that you can push into a hole for easier access to this area. Cross over the rock, then go left and up the vine. Take the southwest bridge and continue south across the bridges. At the end you reach another statue, kill it as before. Take the path it was blocking to reach a chest with a blue Kinstone piece inside. Be careful, rupees will appear that are actually Like Likes. Hit the rupees with your sword to make the Like Likes appear, then keep swiping at them, backing away so they don't eat you, to beat them.
Jump off the left or north side of the ledge and go south to reach a tombstone. Clear away the plants and push the tombstone up. Go inside and get the piece of heart. You'll meet the ghost of Swiftblade the First but he can't teach you anything until you have all seven tiger scrolls. Go back out.
From here dash eastward across the swamp. First, check the small tombstone to shatter it and reveal another symbol. Then, push the rock above you up to fill the hole and make a path to this area. Next kill the one-eyed statue. Climb up the vine that was behind it and take the bridge to a whirlwind. Float southwest to a small ledge. Cut the plants, push the rock into the hole, and go into the cave. Open the chest for another gold Kinstone piece.
Cross over the rock you pushed, and dash west and south across the swamp, to the southwest corner of the area. Here there are three big statues, and you have to fuse your gold Kinstones with them to open the way. Do it, and exit south to the Wind Ruins.
Wind Ruins
Go up the stairs and there's a wall you can bomb. Do it. The chest inside holds a blue Kinstone piece. Go back out.
There's an Armos in the way, touch it to wake it up, then kill it with your sword. Continue on and you reach a shrinking portal. First, shrink and go into the crack in the ground. Get the red Kinstone piece. The Minish here will give you a tip on how to get further. Go back out.
While still tiny, notice that the Armos's eye is dark. You may have tried to awaken it, but it wouldn't move. What you have to do is, still at Minish size, climb the ladder-like part of the Armos to get inside it. Flip the switch inside to turn it on. Then go back out, grow to normal size again, and beat the statue. Take the path it was blocking, then push the stone into the hole. Continue east to the next screen.
Continue on the path. In the screen with the statue blocking your way, you have to defeat the three tektites to clear the way. Once they're gone, continue.
The path is pretty straightforward, there will be a part where it might look like the way is blocked by a stone, but you can walk above it and exit the screen.
In the next screen, defeat all the ropes (snakes) first, and cut down the grass. You'll want a clear path with no enemies so you can reach the Armos at Minish size. Shrink, activate the Armos, then grow and defeat it. Above, push the rock into the hole. Defeat any enemies in your way, and continue to the next screen.
There are three Armos that are standing there, the fourth one to the far left will move and block the way. Defeat the other three to open the way to the two chests (left: 100 rupees, right: 30 mysterious shells).
To get further, you need to shrink, climb up the fourth Armos, and hit the switch to deactivate it. Then when you grow it won't move to block the way. Go through to the area it was blocking. Break all the rocks to defeat any hidden monsters, and defeat the rope (snake) to open the way. Go into the next screen.
Go up and through the door to enter the Fortress of Winds.