HOW to get the DIAMOND

This is really easy. All you have to do is take any available (i.e. Non-nursing adult) villager and drag them under the waterfall. They will fill up a big bowl of water and take it to the fire. If you do this enough times, it will eventually cool down enough for someone to pick it up.

My strategy was to take every single person I could grab and put them under the waterfall. The more people you have doing it at once, the more quickly it will happen.

I think you have to make a potion first to be light and springy

You go to the waterfall and gather water to take to the fire pit and just keep getting all of your villagers to do that over and over until the smoke dissapears.

The pink diamond is you need the light and springy potion. For the ash pearl(or something like that) in the fire you need to go to the water fall and get water on it lots of times because it's was in fire,

You need to drag your villagers to the waterfall, it may take a few trips, but fate they are done cooling the Ash Key, they can then pick it up. I'm sorry this reply was really really late :p