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Level 1 - TCYAILLO
The answer to this puzzle is:
Words: COITALLY, LACILY, ALIYOT, COITAL, CITOLA, COLLY, OCTYL, TALLY, LOTIC, ALLOT, ALLOY, LAITY, COALY, TOLYL, OCTAL, ITALY, LYTIC, COATI, ATOLL, TICAL, LOCAL, LOYAL, OTIC, LOCA, CALO, LILT, LATI, IOTA, LOCI, TOIL, ILLY, LILO, CLOT, TALC, TALI, CIAO, LACY, TILL, COAT, LILY, TACO, CITY, CALL, YILL, TALL, CLAY, COAL, OILY, LAIC, CLOY, COLY, TAIL, ALTO, COIL, ALLY, LOTI, ALIT, ACYL, CAT, LAC, OAT, ALL, AIL, LAT, COL, ICY, TIC, LAY, ALT, TOY, LIT, TIL, ACT, COT, COY
Bonus words:
COITALLY, LACILY, ALIYOT, COITAL, CITOLA, COLLY, OCTYL, TALLY, LOTIC, ALLOT, ALLOY, LAITY, COALY, TOLYL, OCTAL, ITALY, LYTIC, COATI, ATOLL, TICAL, LOCAL, LOYAL, OTIC, LOCA, CALO, LILT, LATI, IOTA, LOCI, TOIL, ILLY, LILO, CLOT, TALC, TALI, CIAO, LACY, TILL, COAT, LILY, TACO, CITY, CALL, YILL, TALL, CLAY, COAL, OILY, LAIC, CLOY, COLY, TAIL, ALTO, COIL, ALLY, LOTI, ALIT, ACYL, CAT, LAC, OAT, ALL, AIL, LAT, COL, ICY, TIC, LAY, ALT, TOY, LIT, TIL, ACT, COT, COY