On the Pinball level where you are avoiding the balls going back and forth, jump if the side-to-side pinball is approaching you. This way, Dirk will not slow down and you can avoid getting hit by the big black ball following you.
When the dragon tries to light you on fire with his mouth, run close and opposite to where the it opens its mouth. Once the dragon has completed with its fiery salvo, run out of his claws reach and face him. The dragon will then directly shoot out the flame that you have to catch with your magical sword (press Guard). Press Attack to release the fire from the sword to cause the dragon pain. Once the dragon is vulnerable, slash it with your sword once or twice. Run out of its way when it recuperates. The process will start again about five times. During the second bout, he will fire two salvos. You can then catch the fire with your sword. During the third bout he will fire three salvos. You can then catch the fire with your sword and so on.
This level is not really that difficult. Remember -- everything is a mirror reflection of the rooms that seem upside down while you are looking up. Get familiar with the behavior of the room and knock it out. However, the difficult part is figuring the locations of the other rooms to get out of this room. The first two are easy because you stumble across them. When you get the Dragon's Eye (so you can see hidden doors), look for an eyeball on the wall. When you see it, use your Dragon's Eye to find the opening. There are only two hidden rooms in the Impossible Room. Look carefully -- one room has bonus items you need. The second room takes you to the Lizard King. When you get the Dragon's Skin (armor against fire), fall down the hole that has fire billowing up on the bottom floor. This will end the Impossible Room and will take you deeper into the castle (Lava Level).
In the first part, the key to defeating Mordroc is to use the "green arrow" that is located in your inventory (press Start). Select the green arrow and lock on to Mordroc. Fire the bow with the green arrow five more times. You have to replenish your green arrow one at a time by killing the mini-black dragons that Mordroc fires at you. Keep collecting the green arrows and make sure to lock on to Mordroc.
In the second part, once Mordroc goes down upon his knees, he changes into a Black Singe. All of your elements are taken by Mordroc and you are going to have to fight the old-fashioned way. He flies around shooting lightning bolts from his mouth. Run away every time you see the electricity forming around his mouth. Get into your guard stance when you do not see the electric bolts forming around his mouth. In another words, Mordroc the Dragon shoots out a ball of electricity (instead of the stream of electricity), and you have to catch it by being in your guard stance. Once your sword catches the bolt, release the bolt and use it against Mordroc. Once Mordroc the Dragon falls to the ground, run up to him and strike his stomach with the sword. The process then repeats. Remember to keep a close eye on his mouth -- electricity forming around the mouth is bad and no electricity around the mouth is good. Do this five times and enjoy the ending sequence.