Lucy comes to metro at Dusty's request, and he warns her that Dominic will go to any measures to keep her from testifying against him, and that Dominic is undoubtedly behind Craig's disappearance. When Lucy tells Dusty that he has no right to tell her what to do any more, he breaks down and tells her that he still cares for her. Although he tries to backtrack, Lucy finds that he is still wearing the medal she gave him. While Dusty talks to Lucy, Dominic sits at a table at the Athletic Club with Bud, the gym manager. Dusty tells Bud that he will see to it that no one testifies against him. In fact, he says with a sly smile, Craig Montgomery is already out of the picture. Dominic says that Dusty will not make a credible witness, so that he needs to eliminate Lucy and Rafael - permanently. Rafael arrives at the table, and Dominic sends Bud away. Rafael apologizes to Dominic for talking to the police and asks for Dominic to help him fight again. Rafael promises to call the district attorney and tell him that he will not testify. Dominic pretends to trust Rafael and agrees to meet him at the gym in an hour. However, when Bud comes back to the table, Dominic tells him that he intends to feed Rafael false information, since he is certain that Rafael must be trying to con him.
Alison gets a despondent Aaron to agree to work with her for three days. She promises to leave him alone if he does not see any improvement in his condition in three days. Once Aaron agrees, Alison overwhelms him with her enthusiasm for everything from food to exercise. Her first surprise is a massage from "Trixie," who shows up in lacy underwear. Horrified, Alison shoves the hooker masseuse out the door, and Aaron breaks into helpless laughter. Next Alison burns part of her healthy meal, and Aaron finds his sense of humor returning. Aaron thanks Alison for caring for him, then they look down to see him moving his foot. Alison exults, "That's only after three hours! Just think what will happen after three days! You'll never want me to leave!" Aaron smiles at her through happy tears.
Katie watches in secret while Jennifer and Mike bill and coo. After the new lovers leave, Katie cries on Margo's shoulder and confides that she has divorced Simon. Margo persuades Katie to go tell Mike that she has never stopped loving him. Katie leaves, and Tom and Casey arrive to help Margo pick out a Christmas tree. Casey walks away and Tom looks into Margo's eyes and suggests, "This Christmas let's give him something we know he REALLY wants."
Mike brings Jennifer home with him and serves her a bottle of special wine, then slings her over his shoulder, undresses her, and puts her in the bath tub. There he sensuously washes her hair and kisses her, but that's as far as it goes. He pushes her out of the bathroom, locks the door, and starts to take a shower. Just then Katie comes to Mike's door. When she knocks, she finds the door ajar and comes in, calling for Mike. She finds Jen standing outside the bathroom door in Mike's bathrobe.
Ali talks Aaron into trying to move his leg again. He is sure the movement was just a random event, but when he concentrates, his foot moves. Of course, having Ali tell him that she believes in him doesn't hurt his effort! Lily drops by to ask if Aaron knows anything about Craig's disappearance. Since it has been weeks since either Aaron or Craig worked together at the Metro, he knows nothing. But as Lily leaves, Margo calls her with information about Craig. After Lily leaves to meet Margo, Ali gives Aaron a sponge bath which seems to make him a little uncomfortable, but for all the right reasons! Later, Ali discovers that Aaron has fallen asleep while she changed into her cute flannel pajamas -- she settles in happily beside him for a long winter's nap.
Sierra and Jordan just happen to run into each other while Christmas shopping. Sierra gives Jordan some shopping advice, and Jordan calls her "an answer to his prayers." Later, he finds her struggling with a large Christmas tree and offers to help get it home to the Walsh mansion where he insists on helping to set it up. The two spend a cozy evening together exchanging personal stories, but are interrupted by the arrival of Lily who cannot hide her anger about Sierra's nonchalance regarding Craig's disappearance. The scuffle doesn't last long, and after Lily leaves, Jordan and Sierra toast their newly decorated tree and Sierra says "Let's run into each other again soon." Jordan is obviously pleased with her suggestion.
Lucy still believes Dusty cares about her when she sees he is wearing the necklace she gave him. He insists she is wrong and takes it off in front of her. Lucy is heartbroken, and runs angrily from him, but not before he warns her against becoming involved with Dominic Ramsey. As she cries in the park, Rafael comes upon her and tells her that he just left the gym where he overheard some things said by Dominic which lead him to believe he may know where Craig is being held. Lucy is determined to find her father and tells Rafael she is glad she has someone like him upon whom she can depend.
Things at Mike's house don't go exactly as Katie had hoped. Seeing the door was slightly open, she called his name and was mortified to see Jennifer -- in Mike's robe -- walking out of his bedroom. Mike, wearing only a towel, enters the room and is shocked to see Katie in his home. Katie is heartbroken. She tries to tell him about her divorce from Simon, but when she sees the rumpled sheets on Mike's bed she assumes they have slept together. Trying to save her pride, Katie lies to him and tells him everything is just fine. Katie later tells Margo she wants to leave Oakdale, but her sister asks her to stay, telling Katie that there may be real trouble where Craig is concerned.....
JJ is missing Jack when Julia suggests a visit to Santa Claus to cheer him up. Meanwhile, Jack meets Carly and Parker at the Christmas Fair and Carly is disappointed to learn that Jack is having dinner with Julia and JJ later. Nancy takes Jack aside, explains that the Santa they've hired is leaving early and presses him into serving as a last-minute replacement. Later, Julia and JJ arrive at the Fair, unaware that Jack is Santa Claus. When JJ crawls in his lap, he asks Santa for a Christmas miracle, for Jack, his dad, to come home. Jack is in agony when Carly catches up to him and he explains that having to make a choice between his two families is killing him. Later, Rosanna takes Carly out for a much-needed cocktail and there, Carly references Jack's difficult position and tells her sister that she loves Jack too much to see him in this kind of pain. Carly decides she's going to help make Jack's decision easier by signing the divorce papers.
Lucy tells her mother she's decided to take her advice and back away from her search for Craig. Suspicious Sierra questions Lucy's sudden turnaround but Lucy works hard to convince her mother that she's sincere. Meanwhile, Rafi is continuing to pretend he wants to get back with Dom to access information about Craig's whereabouts. Rafi overhears Dom planning to fly out to take care of Craig personally. Rafi hurries to tell Lucy the news, unaware that it was just another one of Dom's setups. Later, Rafi blurts something about the airport in front of Sierra but Lucy masterfully covers and explains that she and Rafi are taking an impromptu ski trip to Aspen. Convinced her daughter is telling her the truth, Sierra gives her blessing and Lucy and Rafi race to the airport to steal Dom's flight plan and notify the police of Craig's whereabouts. But, when they get inside Dom's private jet, they're horrified to discover Dom holding a gun on them.
Brother Francis confronts Craig with photographs of Cabot, Lucy, Bryant, and Sierra, and asks him to own up to the impact he's had on their lives. Alone in his cell with pictures from his past, Craig breaks down as the hidden camera in his cell is watched by Sierra!
Paul confronts Rosanna on what's bothering her and she confesses that she said something terrible to Will by practically accusing him of deliberately trying to freak her out. Now, Rosanna's convinced the toys and voices were all in her mind because she misses Cabot so much. Later, Will and Paul talk privately about Rosanna's vulnerable state and Will gets an idea to help Rosanna enjoy Christmas. They'll turn Fairwinds into the most joyful Christmas wonderland in Oakdale in order to replace Rosanna's old, bad memories with new, good memories.
Just as Jack appears on the verge of making a decision about Carly and Julia, Carly refuses Rosanna's advise and sends the signed divorce papers to Jack.
Meanwhile, Lisa tells a conflicted Jack that everything happens for a reason, and after Jack receives the papers, he goes to tell Carly he has come to a decision. Later, while Julia finds part of the divorce papers and thinks it is a definite sign that she has won, Jack tells Carly he has come to realize that she is the one he wants to be with forever.
Sierra, the guilty party behind Craig's kidnapping, talks with Lucinda about how she hopes Craig's imprisonment will help him change for the better. In the cell, Craig starts to break as he is confronted by the ghosts of the family that once loved him. Meanwhile, as the discovery of a broken rosary leads Dusty and Lily to information about Sierra's ties to a Monastery, Craig sees the camera in his room and realizes someone is watching him. Meanwhile, as Dom's plane takes off, Dom ties up Lucy and Rafi and then parachutes out of the plane, leaving them to die. Rafael manages to break free but as they rush for the controls, the plane spins out of control.
As Paul and Will create a winter wonderland in Fairwinds, Will comes upon the Nativity set. Thinking the sight of the baby might upset Rosanna, they decide it best to not include it in their decorations. As Paul exits the room to go attend to a blown fuse, Will leaves the baby out on the table to go help. When Rosanna comes home, she freaks at the sight of the baby and accuses Will of purposefully leaving it out. Paul tries to defuse the situation, but when Rosanna and Paul turn back to address Will, they see that Will has gone.
As Carly and Jack reunite at last, Jack realizes he has to tell Julia he's made his choice. Meanwhile, Julia, thinking that Jack has chosen her, prepares a romantic return for Jack. But, when Jack arrives he tells a devastated Julia it's over. Julia tries to be strong but collapses after Jack leaves, and after throwing her engagement ring away she retrieves it, unable to let go. Carly, meanwhile, thanks God and Parker for Jack's return and upon his arrival home, the two finally make love.
Sierra and Lucinda watch Craig on the monitor, not aware that he has discovered the camera and knows he's being watched. Craig sets his plan in motion to appear contrite on camera, all the while, planning his revenge. Later, Lily and Dusty arrive at Lucinda's and confront Sierra about her link to Craig's disappearance but Sierra explains her way out of it. Once alone with Sierra, Dusty tells her he doesn't quite buy it but doesn't care what she did with Craig, as long as Lucy is safe. Sierra tells him not to worry because Lucy has given up the pursuit of Dom and is on a ski trip with Rafi. Dusty remains suspicious but agrees to back off. Meanwhile, Lucy and Rafi survive the crash but are still handcuffed together. They flee the plane, fearing it will blow up, and rush out into a snowstorm in an unknown location.
Rosanna frets over having jumped to the conclusion that Will had planted the nativity baby and she and Paul go to see Will at Hal's in order to apologize. Meanwhile, Barbara continues to drug Emily to bend her to her will. She hears Hal and Will talking about the fact that Will has left Fairwinds, and she pries it out of Hal that Rosanna is haunted by the ghost of Cabot. Later, as Will accepts Rosanna's apology and agrees to go back to Fairwinds, Barbara's wheels begin turning yet again.