Weevil

Best answer as chosen by Asker / Ratings
The Great Fairy is in the north part of Clock Town (the same area as the kid trying to burst the balloon). You need to bring back the stray fairy in town (found either hovering above the stream up the stairs, or outside the Inn at nighttime) to her. She'll then give you magic powers, which will allow you to shoot bubbles, and thus burst the balloon.