First off, use Holy Eagle to jump onto the Moon Turret. There, use Crescent to make the tide in the Lunar Lagoon recede, granting access into the Sunken Ship. Enter the gaping hole near the front of the ship.
In the chamber that the hole on the side of the ship leads to, Rao will regroup with Amaterasu and after a brief conversation, use the Celestial Brush to guide Rao's Prayer Slips into the seal that had been blocking the door. Then, use the Prayer Slips to exorcise the apparitions on the stairway, earning one Demon Fang for each apparition. Atop the stairs, jump down into the room below. There, open the treasure chests clustered in the center. The chests afar in the corners are actually traps, with demons in them. Power Slash the chests from a distance (equip the Golden Lucky Cat to grab the dropped yen), then use the Prayer Slips to dispel them. On the far side of the room is a high wall, but it cannot be crossed at the moment. Anyway, at the left corner of the room near the golden Buddha statue, there is a corridor. Don't be surprised with the apparition of the Spider Queen there; she is harmless (albeit being quite annoying, moving in front of the camera, blocking sight). Don't forget the Treasure Chests on the alcoves in the corridor. In the next room with a large pile of bones, two new demons are introduced: Jiro and Saburo. See their links for the strategy. With the pair out of the way, proceed further into the corridor on the other side of the room. There, clear the sealed door and use Sunrise in the hole on the roof of the room, causing the sea water to flood back in. Don't forget to dig up the Clover there, too. Also, in the room, there is a balance scale, but it cannot be operated at the moment.
Return to the room with the pile of bones to encounter Jiro and Ichiro again, but this time, with the room flooded, they reunite into the form of Ichiro. After killing the shark demon, return to the antechamber with the high wall. The flooded water will make the barrel at the base of the wall float, which can be used to cross the wall. On the other side (the cannon room), align the cannon so that all 3 firing targets on the opposite wall is blasted. Grab the Pearl in the middle target and the Sun Fragment in the topmost target. The Exorcising Arrow in the bottom target cannot be obtained at the moment. Traverse to the corridor to the right of the wall behind the cannon. There, use the Prayer Slips to dispel the apparitions. Do not forget the treasures in the alcoves in the corridor. In the next room, first, rush up the staircase, watch out for the moss demon's hand. Then, Power Slash the rope hanging the barrel, dropping it down. Jump on the barrel to roll it off the walkway and down to the waters, then roll it toward the hanging hooks of the balance scale. Then, swim back to below the walkway, which prompts the moss demon to raise its hand, attempting to crush Amaterasu and pull her down. When standing on the demon's palm, quickly jump back onto the walkway. Rush to the walkway on the other side of the room, avoiding the hands in the way. Then, run along the corridor, eventually dropping back into the room with the open ceiling. Use Crescent to make the water recede, then jump onto the balance scale to get back on the corridor. Backtrack down to the ground level of the room with the moss demon, then roll the spiked barrels on the floor to kill it, earning 50 Praise in the process. Return to the cannon room, then grab the Exorcising Arrow in the now-accessible bottom target, then use it on the Lockjaw blocking the door on the left of the wall behind the cannon. After clearing the demon, climb the staircase and use the Prayer Slips to clear the seal on the door to the treasury. When the door is opened, Crimson Helm's apparition will appear. It will trap Amaterasu within its jaws, preventing her from moving. Wait for it to leave, then enter the treasury. Open all the chests there, the ones at the corners being hand demons. Then, exit the treasury.