The Patzcuaro Museum is just a block up from Plaza Chica on the corner. Very interesting Indian Crafts (Purhépecha) from around the lake You can't take pictures inside but can in the courtyard. The required tour guides are great if you show an interest - give them a tip. I think the tour was only 30-40 pesos.
Well in the courtyard
An example of Purhépecha house construction
Pre-history ruins behind the museum
Table and chairs
Looking at the entrance and ticket table
Garden in the courtyard