There are two bits of treasure in this area. One of them is held by oneo f the chainsaw ladies (a ruby) and the other (the red gem) is located inside a barrel after you have used the Camp Key to get through the door.

Once you step through the door that you used the Camp Key on, go down just a few steps, turn right and head into this open door. Drop down, here, and use the shotgun to smash open the boarded window. Jump out the window and run to the end, where you will find two barrels,
one of which contains the red gem.

Quote: King A Ling

It's the part where you choose to go right or left. To the right you have to fight the giant and to the left you have to fight the two chainsaw ladies along with alot of other enemy's. I can't seem to find the treasure in that area. Somebody help me!

After Killing all the enemies and the Bella Sisters (the chainsaw ladies) take the Camp Key, open the door with it, walk a few steps throudh the path, you should see sand bad barriers, there is a door to the right of the character, go in it, turn left, Knife the boards on the window, jump over, follow the path down, and knife the barrels to obtain the Red Gem. Knifing the boards and barrels saves ammo.

Just simply go to the left!