Beat the game on weapon master mode.
I like to beat each stage three times (there is a reason for this).
Now go back and beat weapon master mode again. This time
you MUST beat each stage twice, You have to do this!!!
Now once you are done with that you level should be at 72 or higher.
The main requirement to unlock Subchapter 2 is that you need to be at least
Level 72 (Iron Edgemaster). Once you've hit that landmark, go beat Stage 3 of
Chapter 4 (even if you've already done it, you need to beat the level again).
With that done, Subchapter 2 will be all yours. Beat Sub. 2 and you will unlock Lizardman!