Following the Wise Old Man's advice, Goemon and Ebisumaru eventually reach the "Dragon Pond" in the land of Izumo, where the legendary White Mirror is said to exist. Things could not be that easy, though, and as suggested by that place's name, they meet an actual dragon called Hakuryu who is the guardian of the mirror. He then challenges them to a fight in order to prove themselves worthy.
Hakuryu is a giant, white and purplish Japanese dragon; he emerges from either side of the screen and spews three fireballs simultaneously in a spreading manner. Other than that, he doesn't pose any other threat than possibly inflicting coincidental damage whenever he curls up out of the screen.