The 555's power and GND are connected to the toy's power and GND on the PCB so the 555 does not run down the batteries.
The output from pin 3 connects to the existing res mounted near the blob. It is connected so the 555 signal goes though the res then to the blob. A LED is connected between toy's + and 555 output.
The 555 can be modulated by the output of the 386 through a cap and pot.
The 386 can also be affected by a cap and res/pot. This alters the wetness sound.
Below is how the 555 is setup.
The pots and switches are mounted in an old joystick. The pot to affect the 386 is below the switches between the LEDs.
The pots which control 555 pitch and 555 modulation are the x and Y of the joystick.
When the 555 pitch is pushed too far the stock sounds play on the keyboard.
Samples can be found on Instruments page.