STEP 1:

Go west until you reach the up or down path option.  Choose down.
Go west until you reach the beach.  Pick up the bottle.  Open the bottle.
Go back to the up or down path option.  Choose up.  When you reach the healer,
go right.  Keep going right until you find the three path option.  Choose up.
Go north.  Pick up the rag.  Go back the the three way option.  Go east.
USE the rag.  Buy 1 of everything at the store.  Go back to the three way
option.  Go all the way north and go inside the airplane.  USE the dynamite.
COMBINE:  The Oily Rag to the Bottle,  and Bottle with Rag and the Gas
Go find the guy selling ice.  He was near where you found the bottle.
USE the Molitov Cocktail.  USE the Mug.  Go back to the store,  and go right.
Go right again.  USE the Mug of Water.  Go right.  Watch cutscene.  Go right.
OPEN fish.  USE the key.

Thats it.

-Doug McQuiggan:  Game tester/Ideas Guy