Kelly is upset when Renee shows up at Asa's house with the little boy's mother because Kelly saw Jesus as a last chance to get her marriage to Kevin back on track by becoming a "family". The mother had passed out due to a medical condition and had been separated from Jesus and was thrilled to be reunited with him. After they left, Rae (who was there when Renee arrived) tries to counsel Kelly and Kevin about their marriage. She tries to make Kelly see that a baby will not make them a family and will not solve their problems, but she refuses to listen.
At the police station, Bo and John receive another coded message, this one spelling out the name "Sarah". Bo instructs Sarah's guard to stay with her at all times. Sarah heads back to Asa's house and runs into Kelly there. She tells Kelly about the threat and mentions how the code works that the killer is using. Kelly decides to make Kevin care about her again by appearing to be threatened by the Music Box Killer.
Gabrielle tells Bo about seeing Troy several times at the bar and that he claimed to be on a pass from the prison. Bo and John match up the dates that Gabrielle saw Troy and figure out that he could have been the one to kill Madison. They call the prison warden, who tells them that Troy is missing from Statesville prison.
David stops by to visit Dorian on Christmas Day and makes himself at home. Carlotta drops by with the news that Antonio found Adriana and took her back to the school. This gives David an idea, maybe they can pass Adriana off as Dorian's long-lost daughter to get Aunt Betsy's money. Paul tells River that Adriana has been found.
After opening Christmas presents, Blair finally confronts Todd about who he really is and Todd admits the truth. Blair vows that she will take Todd's children away from him and he will never see them again. Todd storms out and heads to the Palace to get drunk. He runs into Kevin there, and when Todd leaves, Kevin calls the police and has Todd arrested and thrown in jail for drunk driving. Kevin finds Blair at Dorian's and suggests that now that they are both free that they can finally be together.
Viki paid Todd a visit in jail and at first was going to leave him there until he sobered up. She finally agreed to take him home, as long as he didn't try to go over to Dorian's to see Blair. At home, Todd tried to call Blair, letting the phone ring again and again until she finally picked up. She told him that she wanted nothing more to do with him and that he would never see his kids again.
Starr came down the stairs at Dorian's house and slipped up by calling Walker, "Dad" to Blair. Blair realized that Starr had known the truth about Todd for a long time and had been lying to her. "I hate you", Starr told Blair when her mother informed her that she could never see Todd again. Starr snuck out and went to the penthouse to see Todd. Blair followed and refused to listen when Starr said that Todd had changed his whole life just so they could be a family again. Starr refused to leave Todd until Blair threatened to call the police.
Natalie was babysitting Jaime when Antonio returned from his trip to Puerto Rico. She offered to stay longer so that he and Jessica could go out to dinner and they took her up on the offer. Just then, John McBain stopped by to talk to Antonio about the new leads on the Music Box Killer. When Jessica and Antonio left, John agreed to stay with Natalie for some Chinese food. Their evening was interrupted, however, when John was called down to the police station. Keep the door locked, he cautioned Natalie on his way out.
Kelly showed Asa and Renee the note she "found" in the foyer of Asa's house and they all headed down to the police station to take the note to Bo. As she had planned, Bo figured out that the coded word on the note was "Kelly". Kelly called Kevin and asked him to rush down to the police station. When Kevin found out what was going on, he was very supportive of Kelly and even offered to take her home and stay with her. Before they left the police station, John questioned her about the note because there were several differences between the new note and the other two the killer had left. After they got back to Asa's, Kevin noticed a pad lying on the table with some faint impressions on it. Rubbing it lightly with a pencil, he realized that it was the note from the killer that Kelly had "found". Kelly appeared in the doorway in a negligee, further confirming Kevin's suspicions. Kelly had made the whole thing up to get Kevin's attention, and in doing so put people's lives in jeopardy from the real killer by distracting the investigation with fake evidence.
Gabrielle again apologized to Bo for not saying anything about seeing Troy sooner. Bo learned that a nurse at Statesville Prison had been killed with an injection, explaining how Troy got out of Statesville, at least this time. Nora was upset when someone mentioned that the music playing on the music boxes is the theme from "Romeo and Juliet". That was the same music that Troy played the night he held Nora captive. It's another clue that points to Troy. John did some digging and found an inn with "Verona" in the name, tying it to Romeo and Juliet. Nora remembered going there with Troy and Gabrielle said it was very close to the bar where she had seen Troy. They decided to try to draw Troy out, so Bo went on TV with a press conference about Troy's escape from Statesville. Then Nora got on the air and pleaded with Troy to turn himself in.
All of Llanview is on edge with the killer still on the loose. Lindsay is nervous about hosting a New Year's Eve party. R.J. gives Lindsay moral support and later admits the holiday is difficult for him this year. Jen goes to Rex's party at Ultra Violet, where she resists Rex's advances. Natalie accepts John's invitation to go to the party at Ultra Violet with him.
Nora comes face to face with Troy in the ladies' room at The Palace. After rejecting Todd's plea to come home with him, Blair calls Kevin and tells him to meet her at The Palace. Blair kisses Kevin and they plan on going up to a room together. Todd searches for Blair at the party. Kelly is devastated when Kevin gives her divorce papers. Dorian bolsters Kelly and urges her to remain strong.
Michael/Al is determined to sabotage Marcie's date with Greg and cuts in on their dance. David panics when he realizes that a detective from the insurance agency is watching Dorian, who is wearing a necklace made from the supposedly stolen Badhra diamond.
Due to the New Year's holiday, today's episode was pre-empted. Regular programming will resume on Friday, January 2nd.
Troy traps Nora in the Palace's ladies room, attempting to convince her he's not the Music Box Killer. She begs him to turn himself in, but he freaks and scurries out. After she tells Bo of her encounter with Troy, he finds yet another victim of the serial killer.
Kevin and Blair make love in a room at the Palace. After the deed is done, Blair expresses her guilt, saying that they can never make love again. Paul pushes Kelly's buttons by telling her that he saw Kevin and Blair together, prompting her to vow that she'll make it hell for Kevin to divorce her.
Blair rubs it in Todd's face that she spent the night with Kevin. He later follows her to Dorian's and, with a violent outburst, forces himself in the door. Meanwhile, David snatches the necklace from Dorian just a heartbeat before the insurance investigator approaches her.