Start the stage by going to the right, while dodging the octopus by jumping over it. Next create a box to reach the box at the right part of the screen. The box which you created would than be destroyed by the octopus so don't fret, you won't die.
While the enemies are dead, quickly create a box and go up to grab the key, all the while creating boxes to go up, hence the octopus/naga can't reach you.
Create a box high enough where once you turn right, you can just see the box in which the blue rolling thingy is rolling on. Stand near the edge of your box and destroy that box(be careful, don't fall or walk right into the enemy.)
After that the blue monster would move left, than he would return to move right, so wait for him to come back to the right first before you attempt to create boxes and get out of the stage.