Carly arrives at Iris's house to tell Gwen that she has arranged it so that Gwen now has full and permanent custody of baby Billy. The sisters embrace, then Carly gives Gwen their dad's pocket watch. Tom Hughes arrives at the door with bad news, that Carly's trial has been pushed ahead to the very next day. Although Gwen insists that she will not testify against Carly, Tom explains that the testimony of the park vendor is probably enough to convict Carly of drugging Gwen.
When Lily asks Holden for their divorce papers, he tears them up. When Lily leaves Holden, she finds Lucinda waiting for her in the limousine. Lucinda is a pitiful sight, with her hair totally gone and weakened from a chemotherapy treatment. Lucinda understands why Lily has made a deal with Keith, since Lucinda has spent most of her life making one deal after another, but she advises Lily to follow her heart. Lily goes to the stable, where scenes of her love for Holden through the years run through her head. Holden walks in, and she kisses him passionately.
Paul has arranged to meet with Tom so that he can assure Tom that he will take good care of Daniel. Tom is gracious and wishes Paul and Emily the best of luck. Emily is touched, and tearfully thanks Paul for the wonderful wedding gift. They start off for the hospital, where Susan is telling Barbara about their children's upcoming marriage. Barbara spews invectives about Emily to Susan, and continues to Emily's face when Paul and Emily arrive. Jennifer finally walks up and tries to stop Barbara, but Barbara insists that she will not give up. Jennifer pledges her full support to Emily and Paul, then announces that she will not leave for Europe until after their wedding.
Meg is still unable to tell Jennifer the truth about her baby, but she is becoming more and more miserable about hiding the truth. She is trying desperately to keep silent until Jennifer leaves for Europe, which she thinks will be very soon.
Meg sets off, determined to lead Dusty to the truth about the baby while not implicating herself in any way. She goes to the hospital where she gets Gwen's records and calls Dusty over. She reveals to him that Billy's blood type makes it impossible for Gwen to be his mother. A stunned Dusty doesn't understand how this happened or what it means. Meg then pretends to retrace her steps during the time she performed the blood tests and feigns a terrible realization that when she was called away from the lab for a moment, she saw Paul in the corridor. Meanwhile, Jennifer tries to force a reconciliation between Paul and Will but she's thrown when Will shows up with Billy in tow. She tries to hold onto herself, but Emily sees she's in trouble and takes the baby away. Later, Jennifer admits to Emily her one time belief that Billy was hers and Emily works hard to convince her to leave town as soon as possible. Katie is shocked to find out that BJ has taken her to his private island. She manages to get the conversation around to Henry and BJ surprises her by agreeing to take her to see Henry in Palo Alto. Then BJ reveals that his private plane is having mechanical problems and they will have to stay there together, for a while. Meanwhile, Mike and Maddie are at Java, concerned about both Katie and Henry. When Olga shows up and orders Henry's favorite drink, Maddie's alerted and confronts Olga. But, Olga pushes Maddie down and Maddie screams for Mike to go after her. Holden and Lily are kissing when they hear Keith approaching and Lily, to Holden's surprise, hides. Holden and Keith have it out over what is best for Lily and when Keith goes, a guilty Lily insists that she and Holden will speak only via lawyers from now on. But Holden, feeling a certain triumph off the kiss, knows better.
Meg continues to lead Dusty on as he gathers clues surrounding the baby mystery. He even goes to Casey and discovers there was indeed a genetic test done on Gwen's baby. Meanwhile, after another emotional encounter with Gwen's baby, Jennifer is starting to like Emily's idea that she leave Oakdale for Europe sooner than planned. But, when she refuses to leave before their wedding, Paul and Emily move it up for her. However, despite the fact that Paul and Emily are certain that they've finally put the demon to bed, Jennifer can't help but feel that they are keeping something from her. While Maddie's working hard to convince Mike there really was an Amazon woman who drop-kicked her for asking about Henry, BJ is getting word from Olga that they've got trouble. BJ's happy mood about getting Katie on the island alone takes a nosedive after word Maddie's been interfering again. And, despite his instruction that Olga handle the teen-aged brat, he wants to get back to Oakdale to make sure she does. Overhearing all this, Katie sets about getting BJ to reverse his revenge plot against people who get in his way and it appears she's succeeded until BJ discovers she secretly called Mike to warn him about BJ and Olga's plans for Maddie. Meanwhile, heeding Katie's warning, Mike is trying to find Maddie. When he does, he realizes she is about to be hit by a car and he jumps in front of it to save her as he pushes her out of the way.
Dusty and Meg go to the hospital to obtain the DNA test done on Gwen's baby. There, they find the room locked and Dusty convinces Meg it's time to bring Hal in so they can get a warrant. Meanwhile, Jennifer demands answers from Emily about what she and Paul are up to but Emily covers. After, Hal arrives, furious when he realizes that Paul and Emily plan to wed. He says Paul is up to no good, and if Emily's involved, then she's going to get pulled down with him. Later, Hal is summoned to the hospital by Dusty. He is skeptical at first, but then Dusty explains how Paul was involved in screwing with the genetics test, and Hal sets out to get the warrant. Meanwhile, at the courthouse, Will is accosted by Casey, who is angry that Dusty knows about the secret paternity test. Casey is furious that Dusty is bringing the whole thing up again, unaware that Paul has overheard. Paul runs back to his apartment to warn Emily that they've got trouble with Dusty. Meanwhile, the judge is about to pass sentence, when Gwen arrives to speak on Carly's behalf and begs the judge not to take away her only sister. The judge then issues a suspended sentence to Carly, and they all celebrate. On the island, BJ has discovered that Katie made a call to Mike and is convinced that Katie has been playing him all along. In order to sway him otherwise, Katie lays a kiss on him. BJ is about to take it further when Olga calls from Oakdale to report her failure to run down Maddie and her mistake in running down Mike instead. An angry BJ hangs up the phone and tells Katie that Mike has been hit by a car. Katie freaks out and demands that he take her back to Oakdale at once. BJ agrees, but secretly calls Olga at the hospital and tells her to finish what she started with Mike.
Gwen and Will were at Jack and Carly's house after the hearing, and Carly thanked Gwen again for helping her and told her how happy she was that she's her sister. She asked Gwen whether she and Will were in love, because it looked that way to her, and Gwen admitted that they were. Carly then told her she hoped they would be careful, because even though they love Billy, they don't need another baby right this minute, and Gwen said they hadn't found any "alone" time yet to worry about that kind of thing. Carly then offered to keep Billy for the night so that Gwen and Will could get away, and after discussing it with Will, Gwen decided to take her up on the offer. Carly promised to take good care of Billy and promised Gwen that he'd be right there when they got back in the morning.
Gwen and Will drove up to Barbara's cabin, where it was snowing hard, and they again professed their love for one another and for Billy, with Will telling Gwen, "Billy's happy because he's got you, and you're happy because you've got me, and I'm quite the catch, you know!" They kissed and began to undress one another as they prepared to make love for the first time.
Jennifer ran into Meg at Java and told her how much she appreciated how honest Meg has always been with her. Meg tried to find out whether Jennifer thought she might ever want to have a relationship with Dusty again, if things were different or after she came back from Europe, and Jenn said she'd never do that to Meg after all Meg has done for her. Meg told Jennifer that she loves Dusty and thinks he loves her, and Jennifer said she was sure that by the time she returned from Europe, Meg and Dusty would be married and have a baby of their own.
Jennifer then went to Carly's house looking for Will, to tell him that Paul and Emily's wedding had been moved up to the next day, but Carly, who was holding Billy, told her Will and Gwen had gone for a long drive in the country. Jennifer reached out to Billy, who grabbed her hand and held it tight.
Hal and Dusty met Tom at the courthouse and told him they needed a warrant to get into the medical records room at the hospital. When Tom asked for more details, they told him they needed to see the DNA test that had been done on "the baby known as Billy Norbeck." Tom had a fit and said that those records had been sealed and no one was supposed to know about them, and he demanded to know how they'd found out about the DNA test. Dusty told him that he'd overheard Casey talking to Will about it and that he'd then asked Casey about the test. Tom was upset that Dusty had questioned Casey about anything at all. Hal explained that they weren't interested in Casey's role in the matter but rather in the fact that it was possible the baby in question had been switched at birth, but Tom was disbelieving. Hal and Dusty told Tom that they had proof that Gwen Norbeck could not be that baby's mother, and Hal said he thought it was possible that Gwen's baby had actually been switched with Jennifer's baby. Tom then agreed to get the warrant for them, and they left to go pick it up at the station.
Tom called Casey and asked him to meet him down at the courthouse. When Casey arrived, Tom asked about the incident with Dusty and whether Casey had told the full truth about his relationship with Gwen. Casey continued to deny that he had ever, even once, slept with Gwen.
Emily called Susan on the phone, pretending to be distraught and saying she had to see her right away. She went to the hospital and burst into tears, telling Susan that the wedding to Paul was off because she'd found out that Paul had lied to her about not being in love with Rosanna anymore. Susan tried to comfort Emily, and while they were hugging each other, Emily reached into Susan's lab coat and pulled out her keys. Susan had to leave to take care of a patient, and Emily and Paul used Susan's keys to unlock the medical records room. They eventually realized they needed to be looking for "Rory Cabot" and not a baby named "Norbeck," and then Paul found the password for the computer in the room and deleted the record for Rory Cabot. Emily found the hard copy in the file and was about to shred it when Hal and Dusty burst into the room, with Hal shouting at Emily, "Don't even think about doing that, Emily!"