Press the green flag, then follow the prompts given by the sprites. Instructions will remain on screen, while timer and stopwatch are active.
Note: The timer works in hours, minutes, and seconds. There may still be some bugs with the display, although the alarm will not be affected. If the stopwatch runs for, more than an hour, it will stay in minutes, (1 hr. 10 min. will be 70 min.) If you find an issue please let me know about it in the comments.