u can get the liquid rainbow on any difficulty .. normal would be the easiest/fastest... the staff of herding can be later upgraded to Inferno Staff shud u want to open Inferno Whimsey
one of the hardest component to obtain as it depends on 2 random occurrence 1) save the merchant & 2) presence of mysterious chest.

More Info on Liquid Rainbow

yw
u might want to look for the ghosts (rescue merchant) while u key farm act2 .. hehe at least sumthing xtra to do .. i know most ppl skip going down the narrow path while looking for KW in Oasis but its worth to check if u hvnt found the Liquid Rainbow.