Lost Chao Locations
Hammer Gloves Air Necklace
Locating the Ancient Ruins:
From the start of the level, hit the egg timer and move forward through the doors that open. Once you are past the robot that looks like E-102 Gamma, you will see metal boxes in the wall. Break these open with your Hammer Gloves and climp up and through the door (if the door is closed, you need to hit the timer just before you). You are now in the central area of the Death Chamber. Go to the opposite side of the room on the lowest floor, and you will see the Ancient Ruin next to the map on the wall.
Finding the Lost Chao:
Activate the ruins with the Mystic Melody and the slab on the floor will open up revealing an underwater area. Jump down, and you will need to activate the egg timer on the opposite side. Swim over to it avoiding the rotating spiked balls and the ghost and flip it. A door will open back where you first dropped in. Swim back and through. Keep swimming forward past the laser firing robots and the ghosts. After the ghosts, you can swim up and out into a room with Chao murals. The Lost Chao is behind a door right above you - you need to active the egg timer to open it. Climb up, flip the egg timer, and glide/climb up to the door where you can reach the Lost Chao.