Well, that didn't go so well...
Head forward and defeat the birds you come across and soon you'll see something new: an explosive trap. These have some delay to the BOOM, so you can often run right past them (if you want to play it really safe, you can trigger them and get back). Past that is another new thing: a small goblin with a boomerang. This weapon returns to him of course, but while they throw it it often roots them in place. Kill him and the archer here to lower the gate. Head in and take out two more birds then run past a series of traps to a ledge that Knack will automatically jump down.
Hit the lever here to open the way forward and see some spinning blade traps. Yep, they really don't want intruders. Wait for them to stop and run past both of them (two is easy). Past that are two more boomerang goblins and an archer. Take out the archer first (you can stand where he is and the boomerangs won't even hit you) then carefully take out the boomerang goblins (don't try jump attacks here: they are dangerous).
Head through the gate and jump past the sword goblin and head for the two archers (they are especially deadly in this narrow spot), then mop up the big guy. Note that on the first ledge you can destroy the right wall for some sunstone. Continue on for a short scene and then a series of spike traps. You can get past the third one easily but stop in front of the fourth one (stay on the left side). Past the fourth trap is a *GROUND TRAP* covered with leaves that will kill you if you fall in. Jump over it and then you'll come to a set of pressure plate traps. You can jump over all these as well. If you do stand on them, a series of arrows will be shot at you (which you should just try and jump over).
This all leads to a bridge with some archers on it you can take out. Further in is a sword goblin and a boomerang goblin. Take them out (avoid jump attacks) and hit the switch. Grab the relics from the right before going on. You'll see a small scene soon. After that, you'll fight a boomerang goblin, a sword goblin and an explosive goblin. Try to focus on the explosive one but take any chance you get (a Blast is good here too). Continue on up a hill and jump over the log the goblin pushes down and kill him. Past that is a boomerang goblin and a new enemy: the Orc (totally going with that name).
These big blue guys mean business. They can pretty much one-hit KO you, so be on guard. They have three attacks, a smash the game gives you a chance to dodge, a second smash that is slower with no heads up, and a third that they charge up and produce a shockwave on. You'll want to get out of the area of effect on that last one. They take three hits to fall, so have fun practicing.
Head through the gate and kill the explosive goblin you see, then the sword one after him. Head forward into the cave and you'll see a scene leading into the next part of this chapter.