I'm confused as to why people are iffy on the water/quicksand clouds. I think they're a relatively nice touch, honestly - they don't seem that off to me.
Also, I checked Lunar Magic and I couldn't find anything that could be causing that sprite to appear in the top left corner. My suggestion at this point would be to simply cover the top left side of that screen with some of your foreground tiles. At the very least, it'll cover up the sprite so it can't be seen in-game.
Other than that, it looks like everything else has been addressed. The only issue I noticed is that the flashing shell once again refused to spawn for me the first time. I'm not really sure what to tell you, honestly, but I know I'm not the only one who has run into this issue. Perhaps you could try relocating it a bit .. or something?
There are three other things I need to know here:
-A level name. I didn't see you post one in the thread, but now would be a good time to come up with one. I would assume you'd want to incorporate the world "Isles" or "Ruins" into it, or something. Don't forget the alliteration and/or rhyme as well.
-Which music you'll be using for the level. Given the nature of the level, I'd recommend this
for the main two areas and this this
for the secret area. Of course, you can pick whatever you want, but these are my two personal recommendations.
-Also, a background. Do you plan on drawing one? I know you did for your other level in SMWCP, so I'm assuming you might here as well. A simple background with clouds would work, but if you want to get "fancy", by all means go ahead.