Follow the clear studs as your waypoint. Continue down the path to the fields until you see the big pointer arrow.
Stay hidden by not going to the light. If you get seen by the Rider, keep pressing Circle to resist. Hit the first rock that you'll come across. Pick up the debris by pressing Circle, then throw it at the bird. Continue forward.
Switch to Sam, press Circle in front of the digsite. Dig up the rock and throw it at the boulder.
Continue to the right, wait for the Rider to pass by. Hit the tree, then hide inside it until the Rider passes again. Move to the right.
Enter the small hatch in the tree, then make your way across and reach the bird. Cross the river. Switch to Sam and grow the plant. Move forward.
As Gandalf, mash Square to repel Saruman's magic. Avoid his fireballs by moving from left to right. Wait for his jump, then jump up before he lands to avoid the shockwaves, he will do this multiple times. Once he's tired, press Circle to lift him up the smash him to a statue.
Smash all the rocks and plants, then press Circle to grab the parts and place them in your inventory. Put all three parts in the checkered part of the boulder, then push the boulder afterwards. Move forward.
Pick up the fruit then throw it at the branch. Move along. Pick up another fruit then throw it at the owl. Switch to Sam and grow a plant. Walk up the ramp and walk across the flower. Switch to Merry, go down to the fishing area and time your button press to catch a crab. Go back up to the riverbank and throw the crab at the torch. Cross the river. Switch again to Sam to dig up, pick up the item and throw it at the beehive. Enter the treehole and crawl under. Pick up the fruit and throw it at the bird. Exit to the background.
During the chase, avoid the logs and the riders while collecting studs and plants.
Continue down the path following the stud trails. You'll reach the Prancing Pony, there is an arrow waypoint in front of it's door, then talk to the guy outside to start a quest.
From the Prancing Pony's entrance, head to the upper right area to find the Blacksmith's Shop. Get the Blacksmith Design inside the center of the house. Bring it to the shelf located in the upper left corner of the house. Press Circle on the shelf and select the Mithril Trowel. Ride the bellows and jump up and down over it. Press Circle to bring up the menu and select the Treasure Trove. Equip the Mithril Trowel and go outside. Bring the Mithril Trowel to the guy outside the Prancing Pony.