So by forum rules no-one here is going to give you a written step-wise mechanism for any reaction, we can help you along but you have to put in the work.
Yes, the oxazole is deprotonated at C2. The N directing is helpful but its also the most acidic proton (K2CO3 is capable of deprotonating to a sufficient degree for a number of reactions to take place).
If the oxazol(ium?) then attacks the aldehyde of DMF, what will likely happen next?