Ando departs to deliver a report to Marn Keep while Targus and Okfaust prepare for their trip to Cozynook when the north is hit with a savage early-season blizzard. Fearing for the safety of their friend alone and in his weakened state, Targus and Okfaust set out in search of Ando. They find him in the company of Sylvani, a beautiful elf maiden who rescued him from the storm. She asks the party for their help in rescuing her family, held captive in Cozynook by the evil lich, Scar. Sylvani presents the party with some gifts to aid them on their quest, including the magical blade Bar-N’adir.
They return to Backbreaker Keep where Sylvani uncovers a door hidden behind the collapsed tunnel in the Keep. It leads to vast underground caverns that she says will take them north towards Cozynook. The party journeys underground for many days to avoid the blizzard. They have several harrowing encounters with undead and a tribe of hobgoblins. Sylvani must reveal her shape-changing powers when Okfaust falls into a swift underground river and is almost lost. Wet, nearly frozen, and depleted of fuel; the party comes to the surface at Mulch Hill, not far from Cozynook. They build a fire and Targus regretfully slays a hibernating bear to procure some furs for a hypothermic Okfaust. Sensing the presence of living creatures near its lair, a banshee attacks them at night and Ando and Okfaust are slain by its unearthly wail. Sylvani resurrects Okfaust with the powers of a magical rod, but Ando is beyond her help. The party buries Ando and heads towards Cozynook, intent on exacting revenge.
Cozynook, once a peaceful logging village, is situated in a valley at the base of the Barrier Mountains. It was the first victim of Scar’s army. Now it serves as his base of operations and is a dark place infested with undead and shrouded in dark mist. Through the mist the party finds the ruined village and an impenetrable dome of negative energy surrounding a dry lake bed. They battle many undead, including some wights that drain Okfaust. Targus is able to pierce the dome using the positive energy of Bar-N’adir, and the party gains access to the interior. They are horrified by what they find. Scar’s zombie minions are constructing a 100’ tall undead colossus from the corpses slain in the war. Luckily, it is unfinished and currently inert. An undead man-dragon hybrid creature guards the area. It sends Okfaust fleeing in terror and brings Targus close to death. Sylvani reveals her true form, that of a silver dragon, and takes wing with Targus riding on her back. Together they defeat the guardian and fight past more of Scar’s minions up to a hidden sanctum where Sylvani recovers her “family” – two dragon eggs.
They escape to the safety of the forest near Ando’s grave. Sylvani thanks them and bestows upon them one last gift – a magic ring of wishes. Targus uses the ring to bring Ando back from the dead and restore Okfaust’s lost life-essence. Sylvani departs to take her eggs to safety, but returns for the party the next day.