When you have talked to the Three Musty Fears, they will ask you to get their flags. Here's how: First go to Mario's Pad and look under his bed.

#1. Next, go to Yo'sters Island (you may have to go through the Pipe Vault) and look between the O and the A of GOAL.

#2. Finally go to the Seaside Town and look behind the welcome sign.

#3. After you do that go and sleep in the bed at Monstro Town. The Three Musty Fears will say something to Mario and when you wake up you will have the Ghost Pendant.