Cesia travels to the Dragon Castle with Nadil's head and gains an audience with the Dragon Lord Lykouleon, leaving the bewildered Dragon Knights wondering where their prize pate has gone. They decide to return to Chantel to ask Cesia, the fortuneteller, only to discover that she has, in fact, left. Instead they speak to Delte, who leads them into the Faerie Forest to face their true selves. The book then flashes back to the origin of Thatz and Rune and reveals the story behind the struggle between Lykouleon and Nadil. Thatz becomes the Dragon Knight of Earth when he breaks into the Dragon Castle to steal the Earth sword and discovers that the Dragon within it has chosen him to be its master. Rune unlocks the Water Dragon from its sword when battling the Demon Fish Varawoo in the Faerie Forest, a fight that traps Tintlet in a magical seal. In the last conflict between Nadil and Lykouleon, the Dragon Lord saves his Queen from the clutches of the Demon Leader, but not before Nadil makes Raseleane barren.