First you have to do the game to unlock the more interresting part. Doesn't mean you can't get the easier one, most comes naturaly as you clear the map.

NOTE: to clear "all"sidequest you don't have to clear all sidequests. I had like half a dozen remained when I got the badge.

The clvl 99 is a bit over what you can naturaly get. Exp farming is done in the Hidden Cave - where you get the Faith head item - as the three dragons there worth a ton of exp.

For the skills/spells you don't have to max all of them. It is actualy pretty impossible with the amount of gold in the game naturaly.
I found slvl 3 for the fireblast enough to deal with things early on, and slvl 5-6 for lightning to do mid-game.
The healing spell does no worth its price, and the lightning spell is way too unreliable for the player (also too much mana).
Berserk can be a useful buff, but I wouldn't invest beyond slvl 3-5 in a normal game. NOTE: this skill/spell strengthens both melee (physical) and magic damage (of spells)!
Traps is the most powerful spell, and it can comboed with Berserk for devastating effect.

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Now there comes the Mew Game, which has its separate save slot, and has a couple of modifiers.
I do not know what happens if you choose conflicting settings, likely the harshest applies (like picking keeping your level and equipment and Level One), while you'll get the hinderance of Furry Armored too, so no Old Masters Set piece for you.

But you CAN combine these settings to get more badges simultaniously.

And no, you do not have to build on the same settings for the higher Old Master Pieces.

Nine Lives can be a pain in the arse, so I suggest after first finishing the game pick that, and Furry Armored. Focus on the main quest, and you'll be done in like 45 minutes.

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For the 1 modifier I say pick Level One. It is annoying, and HAF. Basicaly, you rely on items instead of yur natural stats. Friggin impossible to get a useful amount of HP, so it's mostly a glass-cannon build focusing on magic until you manage to get Willpower.
To get Willpower grab the Pirate Treasure. Fortunately in Mew Game you get Water Walking at the Start.

At a point you'll have to gain Fly, and that is a bloody hard encounter with the friggin warrior-mage things randomly spawning there, so start doing quests and then labyrinths.
Certain quests, like the potato-farm, are becoming available depending on progress in the main quest (and some might be realted to character level?). Also, one quest(-line) only started when visiting a random obelisk.

I'd say, Faith is the best headgear in the game providing insane amount of magic, and magic is good.

Final gear: head: Faith, armor: Gentleman, weapon: Ultimate Dragonbane (set me to 1 HP, but had the best magic stat. first form of Boss delt with berserk -> 2 hit, second round (3 clone appears) a single trap).

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For 2 modifier I heared Stronger Monster also gives more exp, so Naked Cat is a good pick along.

For 3 modifier you'll have to add Nine Lives to the aboce, because combining Naked Cat with Level One is madness, it wouldn't work trying to rely solely on spells coming no buff to them from attributes.
Here are some more tips:
- avoid bushes like plague, use water walking for clearly visible area whenever you can
- whenever possible, do not go south, the map is hardly visible downward
- the hardest part is like clvl 1-20-25, where you can easily get 1HKO accidentaly by random monsters unrelated to quest and such events.
- avoid the Forbidden Forest and The Deep Forest area, as well as that small passage at Purre Mountain in Mew Game infested with insanly high level mages like plague. The monsters there are alway 1HKO you. Go around.
- do quests like no tomorrow. Around clvl 40-45 you'll only have qlvl 30 quests, that's where quest-levels become kinda arbitrary, and you should go for Flying for faster travel. Until this piont being twice the level as the quest suggest is a good guideline.
- when you are very low level, hunt goldfishes! They give a crapload of XP, and have easy sequence. The fight will still last for a period, so if you loose a life or two (not more!), that's ok.
- I dunno how the Old Master Set works, but you get the pieces when the game is officialy over on your character in Limbo. Thing is though, you pick up the pieces from a Golden Chest. So do that quest just to be safe.
- Stronger Monsters not just make monsters even stronger than the change of Mew Game did by switching them compared to New Game, but the monsters also give you now noticable amount of exp. I've finished my 2 setting run at clvl 108 I think. This means crawling all dungeons doesn't worth the risk, or give bad exp/time ratio. But it's up to you.

Suggeted skill-development:
- with so many limitations, you need magic ASAP, and as you'll be week for a while, you won't have access to much money for a while, not even if you walk around the edges and pick up the floating free gold/XP orbs. So get yourself 5 fireblast. You'll need a couple point either way for the fist-monsters which are almost invulnerable to physival (melee) damage.
- after that start investing into Berserk, 5 points will be enough. This strengthens your melee attack as well as spaming fireblast becomes easier, but you still don't overspend.
- after the above, sink all your quest-omoney into Cattrap. This thing is insane with a couple of levels (statpoints) under your belt (but sucks early, and costs more than fireblast). Max it.
- After maxing Traps keep buffing Berserk to the max to get your full potential.
And then you are pretty much done, just grind levels.
- finished around clvl 100. Did not finish Kitmass quest, I find that the hardest quest in the game.

Note: in theory you can grind for lvl99 Old Master Armor. It's main feature is an abndant amount of shield score. It might be pretty impressive for the other stats too if leveled up.