After you've beaten Squid's final boss form, instead of escaping the simulation, stay with him. After a while a pit should open up in the middle of the area that leads to a secret level.



After a little exploring you'll notice 3 fuses, you need to destroy them to gain access to the first broken heart piece.

How to destroy every fuse:





For the 3rd one, you'll need to use the glitch you learn at the end of the game. Simply just hold the jump button in a 1x1 pit.



After you're done destroying all the fuses, go to the bottom of the level and get the heart piece.

After you've gotten the first heart piece, go to level B04.



Another huge pit should open up at the middle, jump down and explore his thoughts.



After a really quick while you'll notice that there's no way to go deeper because of the firewall, so we'll disable it in the next step.

In order to disable the firewall, we need to go back into level C13 to get into a secret area.



Cross the finish line to Eliminate baby squid, but don't go to the next level! Instead, go back to the top left of the level and spam jump until you get to the secret area.



After that you'll need to do a quick puzzle, here is a Youtube link to the solution:


After that, congratulations, now your (almost) entire game is underwater and you made squid mad. Go back to the level with the firewall (BO4.2) and continue in your journey of repairing Squid.

After you found your way to the second piece of their heart, you'll quickly realize that you can't get through the water vents. To fix that we'll just simply have to go back to the water pumping room.



Here is a quick solution to fixing the water mess:


Finally, go back to the secret level where the second piece of the heart is in, and repair squid.

Now all you need to do is to get back to where defeated Squid is, and escape the simulation. Instead of them saying death threats they'll be grateful, but when you come back to older levels they'll be gone. This is the Alternate Ending