Maddie and Mike discussed where Katie was. Maddie confessed that Katie was as worried about Henry as she was. Meanwhile, at WOAK, Katie put her plan into action. When B.J. showed up, she pretended that she and Mike had had a terrific fight, and she broke into tears. B.J. comforted her and asked her to return to Fairwinds with him to get over Mike. Katie agreed as long as Henry wouldn't be there to bother her. B.J. assured her that Henry was on a business trip and would be nowhere around. Mike suddenly rushed in and stopped them from leaving.
Meg and Dusty were cleaning up the Thanksgiving dishes at Emma's farm. They talked about moving in together, and Dusty was pushing for it. Meg finally agreed and got out her old hope chest that contained many memories from her childhood.
Jennifer visited Will in jail, and Barbara showed up. Barbara had been in contact with Will's psychiatrist in hopes of getting Will out of jail. Will could not believe his mother thought he'd poisoned Iris, and Barbara got furious with Will. While they were arguing loudly, Gwen arrived, and Jennifer left in a hurry. Gwen and Barbara argued over what was best for Will.
Iris and Stan arrived at Iris' house, very pleased with how well their plan to frame Will was working. Stan was disappointed that the police had taken all the liquor in the house to test it and proposed they adjourn to Yo's to have a drink. Iris did not feel all that well and asked Stan to drop her off at the pharmacy so she could fill her prescriptions.
Gwen found Carly and asked for help with Will. Carly wanted to help and asked Gwen to trust her. She had figured out that Iris was setting Will up to get rid of him. Gwen took the baby to Carly's house for the sitter to watch, and Carly left for Iris' house. She was sneaking around the outside when Jack suddenly grabbed her. He tried to talk her out of committing another felony by breaking and entering.
A very distressed Jennifer went to Yo's for a meeting with her drug supplier. He was furious that he had lost all his last supply to Dusty and never been paid. He told Jennifer she needed to pay for that shipment, as well, or he wouldn't sell to her. Jennifer agreed to pay and got a small supply of crystal meth. She almost took the drug but then found one of Billy's toys in her purse; she broke into tears and hurled the drug away. Kim found her sobbing on the ground and took her away.
Back at WOAK, Katie berated Mike for interfering with her life again. Mike was confused by Katie's behavior but was convinced to leave when one of B.J.'s "security" men arrived with a gun. The gunman roughly escorted Mike out.
Carly arrived at Yo's, dressed like a dance-hall girl, and put the moves on Stan, who was sitting at the bar, looking for someone to talk to. He started babbling about coming into a great fortune in a few weeks. Back at Iris' house, Jack went into the house himself and found a folder containing newspaper articles about Will and how he'd poisoned Rose. Iris surprised him by arriving home and began to hit on him.
Mike got delivered back to Katie's house, where Maddie was still waiting. He called Katie and let her know he was wise to what she was trying to do. He told her she had better be home in two hours, or he would go to Fairwinds, looking for her.
At the farm, Meg found a plane ticket to Alaska, and Dusty asked her if that represented her way out if she needed to get away from him. Meg suggested that they burn the ticket.
At the jail, Gwen and Will kissed through the bars of his cell and declared their love for one another.
Carly had Stan right where she wanted him until the tape recorder she was using fell to the floor. She grabbed it and covered. Stan excused himself, and it was then that Gwen ran in, desperate to see if Carly had been able to get proof of Will's innocence. Carly assured Gwen she was working on it, but Stan spotted them together and made a run for it. Meanwhile, Jack was able to cover in front of Iris and take the file on Will's past. Later, when Stan returned, Iris realized that Jack and Carly were onto them, and they decided to leave town -- and Billy, who was in Iris' care.
Meanwhile, Jennifer was doing her best to cope with her pain and explained to Kim the connection she felt to the baby that she knew was not hers. She decided she needed closure in the matter. She headed to Iris' and found the baby all alone, having been abandoned by Iris.
Meanwhile, Will got the bad news that until proof of his innocence was revealed, he was being forced to return to the state mental hospital. There, he got dangerously close to losing it completely. But, thanks to Gwen, Carly, and Jack's fierce determination, there was a light at the end of the tunnel when Hal got called away to look at the evidence Jack and Carly had collected.
In a misguided attempt to make Luke more comfortable, Lily took some of his things to Emma's. But Luke was in no mood to be soothed by a mother he felt had abandoned her family to be with another man, and he stormed off, leaving Lily in tears. Meanwhile, Holden's certainty that Lily had exchanged a promise of marriage for Luke's kidney was in doubt when the private investigator confirmed the legitimacy of Luke's kidney. However, Holden confronted Lily and demanded that she tell him the truth once and for all.
Gwen asked permission to see Will, and though Barbara protested, the doctor allowed it. Gwen was strong and loving with Will and calmed him a great deal. Later, when Gwen returned home, she found Jennifer taking care of Billy. Jennifer explained that the baby had been there alone, and then a shaken Jennifer took off. Gwen returned to the padded cell with a concealed baby, and Will vowed to do whatever it took to clear his name so he could be a family with Gwen and Billy.
Meanwhile, Jack and Carly met with Hal, who thought their evidence was good. He put out an APB for Iris and Stan and gave Jack and Carly tacit approval to keep working on the case. They got a clue and headed to Burt's Garage just as Stan and Iris were taking off. Jack grabbed Stan from the car and prevented them from leaving.
Dusty and Meg happily shopped in preparation for moving in together. Meg ran into Emily and Paul, who remarked on Meg's happiness. Meg revealed her guilt over what they'd done to Jennifer but kept her cover in front of Dusty. Later, Jennifer spotted Meg and Dusty walking out of a store and was hit hard with the realization that they were moving in together. Meanwhile, Paul was worried about both Meg and Jennifer's emotional states and set a plan in motion to get Jennifer out of town.
Having confronted Lily, Holden waited for her to admit that Keith had blackmailed her into marriage, but Lily revealed nothing. When Keith arrived, he demanded to know when Holden was going to finalize their divorce. Holden privately told Lily that he was going to prevent her from making that mistake by not granting her a divorce, while vowing to Keith he would fight for his marriage.
Paul found Gwen had smuggled Billy into the padded cell to see Will and voiced his concerns about Will's attachment to Gwen and her baby. Will stood firm and demanded Paul recognize Gwen and Billy as a part of his life.
Meanwhile, Jennifer ran into Meg and Dusty, the happy couple, and while she put on a brave face, her heart ached with the fantasy of having Dusty and her baby to celebrate the Christmas holiday. When she saw Paul, she told him about a telegram she had received from a friend in Europe, which Paul had orchestrated, and said that she wanted to go there and not return. Meanwhile, after seeing Jennifer alone while Meg had Dusty on her arm, Meg's guilt continued to plague her.
Katie successfully convinced B.J. that she and Mike had broken up and got close to discovering Henry in B.J.'s wine cellar. However, between Mike's arrival and Olga's ability to keep Henry hidden, Katie's rescue mission was thwarted. Despite her difficulties, she remained determined that she would find Henry when she discovered a receipt, proving B.J. was holding Henry captive.
At Burt's garage, Carly and Jack successfully apprehended Iris. She attempted an escape and tried to take Carly hostage, but Carly and Jack ultimately prevailed. Stan took off to save himself but was later apprehended. Hal arrived with backup and took Iris into custody. Hal then went to Will in his padded cell with the good news that with Iris and Stan's arrests, Will was free to go. They returned to Iris' house. However, when Hal arrived to take Will home, Carly offered Gwen a place to stay at her house, and Gwen happily accepted.
Henry had a bonding experience with Olga over a bottle of wine in the wine cellar at Fairwinds. Olga told him about her ex-boyfriend, Vanya, who had dumped her, and they commiserated about their love lives, finding "common ground," as Henry put it.
Katie told Mike that he had to move out of their cottage because she had told B.J. she was throwing Mike out. As they were talking, B.J. arrived, so Mike slipped outside to hide while Katie tried to get rid of B.J. Outside, Mike ran into Maddie and explained to her what was happening; she thanked him for letting Katie help her find Henry. B.J. wanted Katie to play hooky from work with him, but Katie insisted that work was about the only thing that would help keep her mind off of how upset she was about her breakup with Mike, so they left to take B.J.'s limo to WOAK. On the road, however, Katie realized they were going in the wrong direction, and B.J. told her he'd decided that instead of going to the office, they should go to his private island in the Caribbean.
Paul called Meg and had her meet him out by the shops of Oakdale, where he told her she would be happy to know that Jennifer would be leaving the country soon, to get away from the reminders in Oakdale, and Meg and Dusty could be completely happy together. Meg wondered whether she and Paul might meet in Hell someday, then she left for work at the hospital.
Emily stopped by the hospital and ran into her mother. Susan asked whether Emily and Paul had set a date for the wedding, and she told Emily that she really wanted to be there to see Emily get married; she said that she hoped that years from then, Emily and Paul would be able to say "I told you so" to Susan and the others who had doubted their relationship. Emily then went back to Paul, who appeared upset that she had invited her mother to the wedding. Paul left, and when he returned, Emily asked him if he was having second thoughts. Paul said he just wanted to formalize things. He got down on one knee and pulled out an engagement ring for Emily, who tearfully accepted it.
At Iris' house, Will had decorated the whole place for Christmas, which awed Gwen when she returned with Billy from spending the night at Carly and Jack's house. Gwen wondered whether they'd be okay at Iris' house, but Will assured her that Iris wouldn't be able to return to hurt them right then. Will and Gwen discussed the fact that they appeared to be living together in Iris' house. Gwen said she needed to take Billy to the hospital to see his pediatrician for a checkup, and they left.
At Oakdale's Memorial Hospital, Jennifer worked on decorating the Christmas tree in the children's ward. Gwen and Will showed up with Billy, and Will didn't want to speak to Jennifer because she hadn't believed him when he'd said he hadn't had anything to do with poisoning Iris. After Jennifer apologized and Gwen reminded Will that Jennifer had basically saved Billy's life earlier by stopping by Iris' house when Billy had been left alone, Will forgave her, and he and Jennifer hugged.
Will and Gwen left, and Jennifer began to cry. Meg saw her and apologized for disturbing her, but Jennifer said it was okay. Jenifer just couldn't believe how torn up she still was about losing her son and how she wished she could just accept the fact that he was dead. Faced with Jennifer's obviously great distress, Meg's guilt overwhelmed her, and she began to hyperventilate. Jennifer asked Meg what was wrong, and Meg told Jennifer that she couldn't "do this" anymore.
Back at Iris' house, Gwen told Will she had never really had much of a Christmas with Iris, and Will told her that things would be different. After he lifted Gwen up to put the star on the tree, he told her to make a wish, but she said she didn't need to. They kissed, and Will pulled back, telling Gwen that although he loved her very much, he didn't want her to do anything she'd regret. She said she could never regret loving Will, and Will then told her he was a virgin. Gwen said she essentially was, too, because, despite the drunken night that she'd had sex with Casey, she had never made love before. They kissed again and sank down onto the floor together.