Head to Rose Town, and go to the far back upper right into a new passage.
Head inside the house and talk to the man and give both ingredients.
Climb up the vine and grab the Lazy Shell Weapon and Armor.
Equip the shell weapon to Mario, and the shell armor to Peach.
Go back to Nimbus Land, and drop down the upper-right hold to reach the hot springs.
Head right through the hot springs and run off the edge to fall into the volcano.