At Fairwinds, Rosanna sees Will standing in the living room and is immediately suspicious of him. When Paul tells her about the evidence that Emily actually was the person who was tormenting Rosanna, Rosanna apologizes to Will. Will tells Rosanna that it is too late, but he lets Paul persuade him to spend the night with them. Rosanna insists on leaving to confront Emily, and Paul accompanies her. Will calls Alison, and Alison and Aaron come to Fair Winds, where Will tells them the news about Emily. At first Alison refuses to believe that Emily could do such a thing, but she admits that she has lost some of her faith in Emily. Aaron takes Alison home and promises to take care of her. Will vows that he will not be blamed again for something he did not do, and he burns a photograph of himself with Emily and Paul.
Emily is horrified that Hal could believe that she is capable of torturing Rosanna by reminders of her lost baby. Hal admits that his faith in Emily was shaken by her behavior with Chris Hughes. Paul and Emily arrive at Hal and Emily's house, and Emily insists that she wants to prove her innocence by taking a polygraph test. Paul and Rosanna leave, and Hal calls the police station to set up a polygraph test for the next day. Alone, Emily picks up the surveillance picture of herself and begins to remember actually holding the doll.
Lucinda and Sierra persuade Tom Hughes to come to the police station to help release Jordan from jail. Lucinda and Sierra tell Jordan that Dusty is stuck at the rescue station, stalled by a snowstorm, in his quest to find Lucy. They go back to Lucinda's to await word from Dusty. Tom asks a delighted Margo to join him for a drink, and the two reconcile. Tom and Margo agree never again to let communication falter between them. They vow their love for each other, and they go home together arm in arm.
In Idaho, Lucy is beginning to give up hope, but Rafael tells Lucy that he loves her and plans to spend the rest of his life making her happy. All Lucy can think of is Dusty, then she hears his voice calling from outside. Dusty leaves to notify the rescue service for a moment, and sees Lucy and Rafael embracing in their joy to be rescued. Lucy calls Sierra from Dusty's radio phone to tell her that they are all right, but just as the three start up the ladder, Dominic Ramsey comes down the stairs and confronts them.
Craig stops by the Walsh mansion to talk with Sierra, and is very relieved when she tells him that Dusty has found Lucy and Rafael and that they are safe. What her parents don't know is that Lucy is still very much in danger -- Dominic Ramsey has surprised them and has pointed a gun at Lucy's head. Dusty tries to reason with Dominic, but he gets nowhere, and tries unsuccessfully to wrestle the gun from Dominic. Just moments before Dominic can shoot, the beams in the mine shaft give way to the weight of the avalanche and crush him. The three make a hasty escape up the stairs and are rescued by the forest service rangers, who assure Dusty that there is no way they will ever find Dominic. A heartbroken Rafael listens as Lucy and Dusty revel in their touching reunion.
Carly surprises Jack at the police station with a Happy New Year's kiss. He is clearly pleased to see her, but needs to leave his desk for a moment to finish some work. While he's in the next room, his cell phone rings...Carly answers. Carly is not surprised when the voice on the other end of the phone is Julia -- who else would be calling him just moments after the New Year? Julia demands to talk to Jack, but Carly tells her that he is busy and hangs up on her. When Jack returns to his desk, Carly tells him about the call, and a discussion about Jack's promise to be a father to JJ ensues. Carly tells Jack that by trying to be his father that he is not really helping JJ, but Jack refuses to go back on a promise. He wants to build a schedule for visitation, but Carly suspects that Jack will never be able to satisfy Julia's time demands. When Jack leaves to take a phone call, Carly says to herself: "You're too nice, Jack, and Julia knows that. I'll have to take matters into my own hands."
Julia, however, may not be as much a problem to her marriage as Carly fears. When Lisa finds Julia in the Lakeview lobby, she is still fuming over her chat with Carly and tells Lisa that if she and JJ can't rely on Jack, she'll find someone upon whom they can rely. Lisa bristles when Julia mentions what a lovely person Holden is, and how nice he has been to them. Lisa doesn't mince words -- she tells Julia that he and Lily have been married many years and adds that Lily has many friends in Oakdale. Julia tries to reassure Lisa that she is not interested in Holden romantically, but Lisa seems somehow uneasy about the conversation.
Holden is waiting at home for Lily when she rushes in, all apologies. She probably wasn't expecting a romantic welcome, but she certainly didn't expect him to announce that he was leaving her that very night. Even though things have been difficult, she is surprised and accuses him of not caring about what has happened to them. He tells her that he does care, and that leaving is not easy -- he says that she has changed and that he feels he has lost her.
And who should see Holden when he checks in at the Lakeview? Julia, who is in no hurry to return to the farm after her chat with Lisa, sees him and immediately asks what is wrong. Holden is friendly, but tells her he doesn't want to talk. She persists, knowing there must be some reason he's checking in to the hotel. He is happy to have someone to talk to, and tells her that he left his wife. She is all sympathy and listens attentively. She is obviously pleased when he tells her he will be moving in at the farm the next day. When Holden's room is ready, Julia says good bye with a very warm hug. And when he leaves her to go to his room, the look on her face says that Jack is now very far from her thoughts.....
Lily and Holden tell Luke and Faith that Holden is moving out. When Luke raises the question of divorce, they skirt around it, though Lily is obviously very upset.
Meanwhile, in an attempt to do damage control, Carly goes to Emma's and tells Julia that the life of a cop is sporadic and both she and JJ need to understand that. The conversation does not go well and Julia winds up threatening to remove both herself and JJ from Jack's life. Knowing this would crush Jack, Carly tries to backpedal but when Julia pushes her buttons, both women warn each other to back off. Later, when Holden arrives, he finds Julia worked up and making him a welcome home pie. They have a warm moment and Julia is even more drawn to him. Meanwhile, Lily, still heartbroken and wanting to make her marriage work, goes to Emma's with a photo of her and the kids. There, she encounters Julia who lets slip that she spent New Year's Eve with Holden. When Lily asks Holden why he didn't mention it, his response was because it was none of her business.
Emily goes to take the lie detector test. Alison tries giving her advice to beat it, but ultimately, Emily remembers more flashes of herself with the doll, causing the meter to go crazy. Meanwhile, Will tells Paul he doesn't want to move back into Fairwinds. He knows better to try to come between a man and his wife.
Katie, under the urging of Henry, goes for one last ditch effort to get Mike back. Meanwhile, Jennifer encounters Mike at Lucinda's and learns about Katie's lies. Jennifer makes an impassioned speech against deception to Mike and Mike is affected. Jennifer asks if Mike still has feelings for Katie and Mike denies. Later, Jennifer goes off to find Henry and blasts him for trying to bamboozle her and Mike. Henry tells her that Katie and Mike have a love that will never end and it's just a matter of time until they get back together. Meanwhile, Katie presses too far with Mike and Mike winds up not only defending Jennifer, but also proclaiming he loves her.
Aaron and Alison were talking about Emily. Alison can't believe that Emily would do anything to hurt Rosanna. Meanwhile at the police station, Paul demanded that Hal arrest Emily. As Paul and Hal argued, Margo came and took Emily into the interrogation room. As Emily was waiting for Hal, she had a flashback about the map of Fairwinds being in Daniel's backpack. Emily called Alison and had her get the map which they destroyed. At the hospital, Kim approached Will and asked him if he would like to call his father. Will said it wouldn't do any good. Kim tried to tell Will that all people make mistakes and people change because of it. She believed that Will has changed and didn't have a mean bone in his body. Will replied that he wished his father would believe it too. Kim told Will that if it were true about Emily, Hal would need him and Will should be there for him. Will went to the police station and after hearing the argument between Hal and Paul, Will took and passed a polygraph test. Emily was later arrested.
Mike told Katie that he was in love with Jennifer but Katie said she didn't think Jennifer knew it. Katie apologized again and asked Mike not to be angry with her. He said he wasn't. Katie kept questioning him until he became agitated and told Katie that he didn't love her and he had moved on. Mike said he would never forget the good times they had and they hugged. Katie abruptly left. Mike called Jennifer and asked her to meet him where he professed his love for her.
Henry told Jennifer that he would do anything for Katie and that he was in love with her. Jennifer asked if Katie knew. Henry said it wouldn't matter because it couldn't hold a candle to what Mike and Katie had. After Jennifer left, Katie appeared and told Henry what happened. Henry couldn't help but hide his enthusiasm and tried to convince Katie that she needed to let Mike go. Katie refused to believe that Mike was over her and started to devise another plan much to Henry's dismay. Henry told her that if Mike were using Jennifer then Katie should do the same and asked her to marry him!
Ben went to the hospital to talk to Bob about Aaron's arm. Ben wanted Bob to check the results of the last x-ray of Aaron's brain because he thinks they missed something. Ben thinks that Aaron has some swelling on the brain that is affecting his arm. Bob placed a call to Aaron asking him to come to the hospital for some more tests.
Lucy, Dusty and Rafi are at the police station, giving their statements about what happened with Dom. Rafi observes Lucy and Dusty carefully and their connection is apparent. Alone with Lucy, Rafi says that when they made love, it meant something to him and though Lucy agrees, their conversation is cut short by Dusty's return. Meanwhile, Craig enters as an anxious Sierra awaits Lucy's return. Craig tells Sierra that he blames Dusty for putting Lucy in danger and a disappointed Sierra accuses Craig of already breaking his promise to be a new man. Craig swears he has changed, acknowledges that he is also to blame for what happened to Lucy, but says he still believes that Dusty's life is not the life for Lucy. Lucinda enters with Jordan and Sierra is happy to see him. Later, Lucy, Rafi and Dusty enter for an emotional reunion. Lucy is overwhelmed to see Craig safe and sound, but then demands to know where he was. Sierra holds her breath, but Craig keeps his promise and says that he just needed to take a little break. Lucy is furious, but Sierra steps up and supports Craig. Later, Rafi steps out of the room to make a call and Dusty suggests they celebrate with champagne and asks Lucy to go with him to Metro for some special bottles. When Rafi returns, he is not pleased to discover that Lucy left with Dusty and admits to Craig that he's in love with her. Meanwhile, Dusty admits he still loves Lucy and wants her back.
A distraught Lily goes to Milltown and in her emotional state blames Carly and Jack for her loss of Holden. Carly advises Lily to go tell Julia to stay the hell away from Lily's man! Meanwhile, Julia finally takes off her engagement ring and packs it in a box. Holden enters and she tells him that she's decided it's time for her to move on. They spend some time together but later, she asks him to watch JJ for her as she runs some important errands. She goes to Carly's house and claims to simply be dropping off a box of things that Jack bought for her. Carly refuses to believe her and accuses her of trying to see Jack but Julia thrusts the box at Carly and goes. A curious Carly can't stand the suspense and opens the box to find a sexy negligee. Carly's blood boils and she rips it to shreds. Later, Lily arrives at the farm looking for Julia and finds Holden instead. Caught, Lily admits she came there to talk to Julia but Holden insists that Julia has nothing to do with the fact that their marriage is in trouble. Later, Julia comes back and a devastated Lily returns to Milltown where she and Carly decide it's time to get rid of Julia. Meanwhile, Holden confesses to Julia that Lily thinks Julia has designs on him and Julia responds by kissing him!
Flabbergasted by Henry's proposal, Katie insists she's not in love with him. When Henry reminds her that she wasn't in love with Simon when she married him, Katie tells him that she is still in love with Mike. Later, Henry mentions that Mike might not like the idea of her marrying Henry and Katie's interest in the idea perks up. After an honest and heartfelt re-proposal from Henry, Katie says yes and he presents her with a makeshift engagement ring. Henry suggests a Valentine's Day wedding and Katie agrees, but secretly comments that Mike will never let the wedding happen. Meanwhile, Mike and Jennifer are at Mike's place tearing each other's clothes off. They finally make love and pledge their love to one another.