Ok, I haven't played this game all the way through for a while (as in about a year), although I played the first two levels a couple of days ago. Anyhoo, I don't think there is a Leprechaun Shop on this first level (which I think is Shrek's Swamp?) - the only times you see him is first when he wants you to collect the fairies and then afterwards you have to pay him to get through the gate to continue.
On the second level (Spooky Forest?), after you have used Donkey's BurroBlast to knock over a few of those giant trees to keep going up to tiny island things, you get to one covered in bats with a grey stone bridge sort of in front to the left. If you use Fiona to slow time (so the bats don't get you) then go right instead of left, there should be a little non-batty section with the leprechaun sitting on a rock.
I honestly can't remember where the shop is on the third level (my overriding memory from that is playing with my friends and running away screaming from the troll dropping treasure everywhere, but that's beside the point). I do know, though, that to go on to the next level you have to talk to King Harold, who I think is somewhere down a street on the left-hand side of the main road. He's standing next to a door in the right-hand wall or something, and when you mosey on up to him he says something along the lines of "Do you want to go to the next level?" and then you're like "No, I decided I'd play the first three levels then stop. Twit." *cough* Or not.
Hope that helps. =)
People are like slinkies: basically useless but amusing to watch falling down stairs.
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