Press the small red button on the house that resembles a camera. Go inside and continue to the room on the left, and look at the box on the left to see the next puzzle. This puzzle is solved when you piece together the labels correctly on the bottles, then pour chemicals from the two bottles matching the partial labels indicated.
Make all the light in the room go red by going to the dials and pressing A three times, switching the top control to the right, pressing C and B, switching the top control back to the left and then pressing C three times. Then when the room goes red pull the lever on the wall 3 times to get three photos which you then need to process by going back to the box of chemicles and soaking the 3 negatives.
The photo will be of your grandad which when you take to the other house and show to the camera will enable you to proceed to the next area.