After defeating the undead knight at Varenshade, ghostly blue wisps drifted through the chamber. From the shattered well burst a seething shadow—the horror the party had come to investigate. It consumed the wisps and vanished into the Ethereal. Searching the knight’s remains, Kalidus identified him as Skarn Dawnveil, former commander of the Order of the Amethyst Claw. Upon the remains, Zera found a silver necklace with a carved Black Hand of Bane. Kalidus demanded its destruction, but Jasper intervened, noting two strange green eyes on the palm. He kept the necklace and agreed to help Kalidus return the knights' bodies to Phlan. Criticized for consecrating the dead instead of pursuing the horror, Jasper left on bitter terms.

In a flashback, Emmit met his elven friend Galadrathrill in Shadowdale, who had purchased Emmit’s curiosities shop despite having no business experience. In the present, during a dream, Emmit was visited by his archlich patron, Lady Saharel, who said she'd briefly heard the laughter of Emmit’s son before it was silenced. Believing the Varenshade horror had consumed his family’s souls, Emmit asked for her help. In exchange, he agreed to rest near a sentient mirror in the ruins of Elun'dae, allowing Saharel contact with it in the dream world.

At Lady Saharel’s suggestion, the party traveled to Shadowdale to recruit Galadrathrill as a guide through Cormanthor, an abandoned elven stronghold. In the forest, they were ambushed by tree-like creatures. After defeating them, they reached Elun'dae and found the mirror. A face in the glass—Lunacirith—offered them absolute truth to any yes/no question if they could pass her test. They faced vilified versions of themselves; all but Zera succeeded.

Resting near the mirror, Emmit again met with Saharel. She revealed the horror was a host-shifting being that fed on and amplified evil. It now inhabited Vernin Aldrith, the cruel former master of Mr. Jingles. Emmit told the group, and Mr. Jingles fled in terror.