Mike arrives at Lucinda's house to talk to Lucinda about some repairs on her house, and encounters Katie. He notices that Katie's wedding ring is missing, but Katie lies to him and tells him that she lost the ring down the sink, and that Simon is planning to replace it at Christmas. Jennifer arrives to talk to Lucinda about the advertising campaign for Street Jeans, and Mike tells her that he has changed his mind and is willing to continue modeling for Street Jeans, but he still wants to explore a personal relationship with her. After Katie leaves, she reaches Henry in New York City by phone, and she arranges to meet him there.
Aaron and Alison surprise Holden at Al's Diner, and Holden is delighted to see Aaron walking. Holden leaves and thanks Alison for helping Aaron, and Alison begins her job as waitress. When Alison learns that the cashier has quit, she tries to talk Al into offering the job to Aaron.
Hal leaves home to meet Will at Al's Diner, and Emily tells him that she is going to the doctor because she is sick. Barbara instructs the obviously drugged Emily that she is to tell Hal that the doctor says that she has only a virus, but instead she must do something important. Emily, as though hypnotized, repeats, "only a virus." As Emily leaves the house, Kim arrives to visit Barbara. Barbara tells Kim that Will is miserable at Fairwinds because Rosanna is unbalanced, imagining things about Will. At Fairwinds, Will awakens from a nap in which he has dreamed that Rosanna is threatening to have him locked up in a mental facility. When Rosanna enters the room, Will leaves hastily. Will meets Hal at Al's Diner, where Hal assures him that he will help if things get too bad at Fairwinds. Hal leaves, and Alison tries to chat with Will, but Will leaves abruptly. Back at Fairwinds, Rosanna is aware that Will does not trust her, but Paul tells Rosanna that she must face that fact that she is a little afraid of Will. Reassured by Paul's understanding attitude, Rosanna and Paul begin getting out Christmas decorations. They return to the living room to find Cabot's stocking hanging over the fireplace. Will walks in, Rosanna rushes out of the room, and even Paul is suspicious now. Emily returns home, where she tells Barbara that, as instructed, she got Cabot's stocking out of the attic and hung it over the fireplace.
Julia crouches on the floor of her hotel room in the dark, crying. She reads a note that has been slipped under the door and cries, "Oh. J. J., what have you done?" At the same time, Carly and Jack wake up on the couch after a night of lovemaking. The doorbell rings, Carly answers it in her robe, and finds J. J., who demands to see "his dad." J. J. tells Jack that he heard Julia crying through the door and he begs Jack, " Come back. She needs you." Jack goes to the phone to call Julia just as Julia arrives at the door. Carly offers to leave and go to Emma's to see about Parker and Sage, and goes upstairs to dress. Jack explains to J. J. that he has to be loyal to his original family of Carly, Parker, and Sage. Just before Carly slips out the front door, she hears Jack telling J. J. that Julia will always have a special place in his heart. Julia tells Jack that she might stay in Oakdale so that he can keep his promise and be a real dad to J. J., while Carly runs into Holden at the Snyder farm and tells him that she hopes that Julia will return to St. Genevieve.
Jennifer is thrilled that Mike has decided to model for her company, but wonders why he changed his mind. Mike admits it has to do with his conversation with Katie, and that she pushed the "right buttons." Jennifer wonders about his feelings for Katie but he details some of his issues with her -- but Jennifer wisely suspects that "the gentleman doth protest too much!"
Katie and Henry enjoy a long awaited reunion and when Henry learns Katie and Simon are divorced, he insists they order champagne! Katie, however, is not feeling as celebratory. She tells him about her lie to Mike, and Henry is indignant! He insists that the reason she returned to Oakdale is not because of Craig's disappearance, but because she missed Mike. Henry also tells her that she must tell Mike before it's too late, because he believes Mike still loves Katie, but she starts to cry as she tells Henry about the scene she stumbled upon at Mike's house. Mike and Jennifer enter the bar at this moment, just in time for Mike to see Katie in tears. "Katie, are you crying?" he asks with more than casual concern. Seeing that Mike and Jennifer were holding hands, Katie fibs again and tells him she is crying because she misses Simon so very much. When Mike and Jennifer leave to find their own table, Henry continues to try to convince her to tell Mike the truth -- he even compares her to the tragic "Camille," and accuses her of trying to be the sad martyr. But when Mike and Jennifer leave the bar, traces of the old Katie return as she says "Seeing Mike leave with Jennifer totally bites!" Henry smiles as he sees a familiar spark return to his old friend's eyes!
Rosanna reels from the shock of finding Cabot's Christmas stocking, which was hung by the Fairwinds chimney with extra care. Through a process of deduction, Paul and Will conclude that Barbara is sneaking into Fairwinds and setting up reminders of Cabot. They storm into Hal and Emily's kitchen demanding an explanation from Barbara, but Barbara is nobody's dummy -- she has called Kim to corroborate her claim that she was home when Cabot's stocking appeared. Kim had to tell them that Barbara had, indeed, been in her home when the stocking incident occurred, but when Paul and Will left, Kim let Barbara know that she suspected "something." Barbara, of course, was indignant -- but she would do well to remember that her Aunt Kim has known her for many years!
Jessica and soon-to-be-ex-husband Ben meet with John Dixon about Aaron's botched surgery. Dr. Dixon insists that Aaron's paralysis did not need to happen and suspects Ben isn't telling him everything. Ben surprises them both, and instead of telling Dr. Dixon about his fraudulent drug test, he presents his resignation letter. Jessica and Dr. Dixon talk privately for a moment and Jessica tells Dr. Dixon they will fight any action against Ben. In a comment that is sure to entertain long-time ATWT viewers, Dr. Dixon tells her that he wishes all of his ex-wives were as supportive as she was!
And speaking of Aaron, it seems his paralysis will be temporary. His spirits rise immensely when he discovers that he can operate the cash machine at Al's Diner and he accepts the position as cashier. Ali and Aaron go to Holden and Lily's to tell them the great news, but find only Luke and Faith at home. As the children go to find Christmas ornaments, Ali, in tears, tells Aaron that every minute she is with him she loves him more. They kiss....and Aaron smiles bigger than he has in many, many months!
Jack tells Carly that Julia is probably not leaving town and admits that because of JJ, a part of him is happy about that. Meanwhile, Julia tells Lisa that she is moving on, even though she continues to wear her ring from Jack. Julia realizes she cannot stay at the Lakeview any longer and reaches out to Holden for help, unaware that he and Lily are having Jack and Carly over for dinner. Julia makes her way to Lily and Holden's house and walks in right as Jack and Carly are sharing a kiss.
As Sierra reassures Dusty again that Lucy is safe, Lucy and Rafael finally find shelter in an old mining shaft. Lucy and Rafael bond as they attempt to call for help and explore the place, but all to no avail. Lucy is freezing and Rafael ends up trying to warm her with his body heat, vowing that they will get out alive. Meanwhile, Dusty demands that Sierra prove to him that Dom is not the one behind Craig's disappearance so Sierra shows Dusty the monitor that looks into Craig's cell. Later, Craig's efforts to show Brother Francis that he has reformed are foiled and Craig decides to start praying to give the illusion to his captors that he is in fact repenting. Meanwhile, Dom has set a trap for Dusty, thinking he is the only person left alive with information about the botched boxing match, now that he has taken out Lucy and Rafi and Craig is nowhere to be seen. Dom arranged for someone to fiddle with the electrical outlets at Metro and when Dusty arrives, he gets a real shock.
At Lily's house, Julia is mortified to have interrupted Carly and Jack's party with Holden and Lily. Carly wonders if she's following them and Julia explains she only came to speak with Holden. She goes outside and Jack follows but when Julia tells Jack she doesn't want his help, Holden comes outside to offer his. Once alone with Holden, Julia breaks down and tells him she's all alone. When Julia leaves, Jack shares his frustration with Holden, and Holden tells Jack this time is tricky for all concerned. Julia needs a place to stay and Jack needs to reconnect with Carly. Jack then gets an idea and he and Holden go to Emma's hoping to arrange for a home for Julia and JJ for the holidays.
Meanwhile, Carly shares her concerns with Lily that she doesn't think Julia is ready to let Jack go and secretly wishes Julia would just go away.
Jordan arrives at Lucinda's just as Sierra learns that Lucy isn't at the family cabin. Growing increasingly worried, she attempts to locate her daughter and Jordan winds up helping her, trying to calm her by saying Lucy and her friend probably went to a hotel. Meanwhile, at Metro, Curtis finds Dusty unconscious, having been electrocuted. Dusty is revived and immediately realizes an attempt was made on his life. He calls Sierra and is horrified to learn that she hasn't made contact with Lucy. Dusty tells her he thinks the ski trip was all a ruse and that Lucy is still going after Dom. Meanwhile, Rafael and Lucy are making the best of things at the mine. Lucy is worried about her father and Dusty, but Rafael makes her focus on their survival at hand and Lucy toughens up.
Jessica tries to get Ben to rescind his resignation and demand an administrative hearing to clear his reputation but Ben steadfastly refuses. Curtis calls Ben to meet him at Al's and Ben and Jessica go to meet up with him and fill him in on everything. Meanwhile, Alison and Aaron are working together and bonding at Al's when Curtis, Ben and Jessica all arrive and sparks fly as Alison lashes out against Ben. Both Curtis and Aaron learn that Ben has been accused of malpractice and subsequently resigned but later, Jessica is shocked when Alison blurts that she read the incident reports. An angry Curtis storms out with Ben and Jessica following and Aaron demands to know why Alison has been keeping things from him. Later, when Aaron finds out Alison got him the job too, he leaves disgusted. Later, Jessica vows to get her hands on the reports and keep fighting for Ben.
Jack and Holden get Emma to agree to let Julia and JJ move onto the farm. Holden goes to the Lakeview and tells Julia, who initially flat-out refuses, but later accepts, realizing it will be best for JJ.
Meanwhile, back at the farm, Emma councils Jack, who has made his decision to stay with Carly, but is still having trouble juggling the two families. He is determined to honor his promise to JJ and to function as the little boy's father, but Emma points out how rough that will be on Julia. Meanwhile, Carly and Lily know that Jack and Holden are off trying to come up with some idea of how to deal with Julia. They discuss Carly's desire to get Julia out of Jack's life, which Lily supports, and Lily and Holden's on-going marital difficulties. Carly points to herself and Jack as an example of what love can overcome, and urges Lily not to give up. Carly gets tired of waiting for Jack, and decides to head home. She agrees to do Lily the favor of dropping something off at Emma's on the way and takes off. Later, as Jack and Holden prepare to tell Carly and Lily that Julia and JJ are moving into Emma's, an unsuspecting Carly walks into Emma's kitchen and finds herself face-to-face with Julia.
Rosanna returns home as Will and Paul consider that Rosanna herself may be behind the strange goings-on at Fairwinds. When Will leaves, Paul gingerly broaches the subject. but when Rosanna realizes what he's suggesting, she does not take it well at all. She adamantly insists it's not her and when suspicion falls back on Will, Paul agrees to talk to Hal and bring Will's doctor into this. Meanwhile, Will goes to Al's Diner, where he and Alison commiserate. She tells him she knows what it's like to feel like the town pariah, and bolsters his spirits, assuring him that this will pass. Meanwhile, Barbara is preparing to send a hypnotized Emily out on another haunting mission when Hal returns home unexpectedly. Barbara avoids disaster, and once Hal goes upstairs, she sends Emily off. Later, Will arrives back at Fairwinds and sees an intruder, who he recognizes as Emily, as she thrusts the doll she was planting at Will and gets away. Its right then that the lights go on and Paul and Rosanna find Will standing there alone with the incriminating evidence in his hands!
Lucinda sets up a publicity photo-op at Metro for Jennifer and Mike but when Jennifer's late, Mike gets roped into questions he doesn't want to answer. Just then, Katie walks in and saves him from the flashing light bulbs and they talk about how much things have changed. Henry comes in, sees them together, and thwarts Jennifer so Katie and Mike can have more time alone together. Later, Jennifer and Mike invite Henry and Katie to have some champagne as a way of saying thanks to Katie for saving Mike. Katie wants to go, but then some partying nurses come in from the hospital and spill that Katie got her old job back. A suspicious Mike demands to know if Katie is staying in Oakdale for good when Henry, after plotting with Katie, places a phone call, pretending to be Simon and saves Katie from the hot seat. Katie is relieved as she hands the phone out to Mike, saying that Simon wants to say Merry Christmas.
