Sorry for the level of difficulty! I think a few others were having the same issue. Once you destroy all items, however, there should be a dialog box that tells you to return to the birdhouse. Make sure there isn't a little object hiding somewhere if you are not able to return to the birdhouse. Once you do that, you should have the next level.
Hmm. After starting the game again I made it about halfway through the first floor and THEN the dialogue box appeared.
On the new level I'm experiencing another issue. When make it up the elevator, if I'm caught and restart the level the elevator is already in the up position so I cannot progress.
I also cannit figure out how to open the door on the floor with the scientist even after destroying everything... but that night be on me.