The heroes trek through a desert under the sweltering heat of four white suns following the instructions of the Dungeon Master to head towards the setting suns (presumably westwards).
Inspired by the heat, Eric relates a story about how he was lost on safari. It turns out he was lost in his back garden not Africa but managed to talk to his father on the walkie-talkie who sent the gardener out in the golf cart and pick him up.
Meanwhile, investigating something that kicked dirt at her, Uni unearths a burrowing giant scorpion. The heroes run into a cave to hide from it.
A passing Sir John overhears the commotion and also hides in a different cave from the scorpion but has the misfortune of choosing one occupied by a blue dragon. He flees from the dragon but bumps into the scorpion and the two monsters do battle, leaving him to cower helplessly on the ground. The scorpion flees after receiving an electrical bolt and the dragon chases after it. The heroes emerge from the cave and wrongly think that Sir John vanquished the scorpion and congratulate him. He doesn't correct them and leaves for the village of Pendrake.
Dungeon Master appears from behind a rock and instructs them to go east to the Valley of the Beholder where they must defeat the beholder as it guards the portal home. He says "And remember, sometimes by looking back you can see a clearer path through what lies ahead," before adding, "but beware, for only beauty can defeat the eye of the beholder." He then disappears behind a rock.
After Uni taking Dungeon Master literally and looking backwards beneath her legs the heroes deduce that the first part of the riddle refers to Sir John and they trek through a giant mushroom forest to find him.
Meanwhile in Pendrake the mayor is admonishing Sir John for being a coward and plans on sacking him as the village's knight and hiring a new one. Sir John implores him to reconsider because of his son Timothy and the mayor gives him one final chance to do something heroic. Grateful, Sir John and Timothy leave Pendrake to perform an unplanned act of bravery.
In the giant mushroom forest the heroes are startled by the hostile sounds and Diana asks Presto to conjure up some light. He conjures a birthday cake complete with lit candles and they spy snail people lurking nearby. Unfortunately Uni's tail brushes across Bobby's nose, making him sneeze and blow out the candles. Plunged into darkness Hank fires an arrow as a flare. The light makes the snail people recoil but as soon as it fades the heroes are quickly overwhelmed by the monsters who ensnare them with tentacles from their eyes-stalks and bundle them into sacks. Presto tries to conjure the snail people away but his recital asks for them to be banished from his sight and the spell responds by placing a bucket over his head. Only Uni escapes capture and the snail people slither off back to their lair with the heroes trussed up in sacks.
Uni rushes into Sir John who is venturing through the giant mushroom forest and knocks him over, making him drop his burning torch. He deduces that she wants him to follow her but refuses because he has to find a brave act to perform. Grabbing the torch in her mouth she runs off to follow the snail people. Reluctant to be on his own in the dark he follows Uni who drops the torch in the midst of the snail people. Failing to spot the monsters Sir John grabs the torch but upon spying them flails it around in terror, the blazing light causing them to flee. Emerging from their sacks the heroes see Sir John waving the torch around and wrongly deduce that he purposefully fought them off. Diana thanks Sir John by giving him a flower she picked.
The heroes explain that they want Sir John to escort them to the Valley of the Beholder but he makes an excuse to leave by saying that he needs his shield. Presto conjures a dustbin lid as a substitute shield and Sir John agrees to escort them, reluctant but hoping it would be classed as a sufficient act of bravery by the mayor of Pendrake.
Trekking towards the valley Hank asks Sir John whether they should have a plan. He takes the opportunity to slink off saying that while they think of a plan he'll scout ahead for the beholder. While he is on his own his is confronted by Venger who instructs him to escort the heroes to the valley but to leave them at the mercy of the beholder. He refuses initially but Venger shows him an image of a caged Timothy surrounded by slavering wolves and so he reluctantly agrees, on the condition that his son will be released.
Sir John returns to find Eric doubting his bravery and with false bravado leads the heroes onwards to the valley. When they reach it he makes his excuses and leaves saying that he only agreed to escort them to the valley and not to fight the beholder. The heroes are disappointed with his cowardly decision but face the beholder nonetheless.
The beholder soon overwhelms the heroes with energy beams that cause the ground to erupt and spew out lava.
Venger admonishes Sir John for his cowardice but returns his son as promised. Timothy hears the heroes cries and runs to help them, with Sir John following.
The heroes have now been ensnared by tentacles coming from the beholder's eye-stalks. Sir John has a change of heart and joins the battle but is also ensnared and reeled in to face the beholder. Hank wonders aloud why Dungeon Master said that beauty would defeat the beholder which prompts Diana to instruct Sir John to show the monster the flower she gave him. Seeing the flower cause the beholder to deflate and where the beholder once was is now a portal home.
The heroes rush to the portal. Bobby is reluctant to leave Uni behind but Hank reminds her that she doesn't belong in their world and that she'll have to stay with Sir John. Bobby sees the logic and agrees but before everybody can go through the portal Venger arrives and attacks Sir John for his disobedience. Soon Sir John and Timothy are cornered with the dustbin lid incinerated by one of Venger's bolts.
The heroes launch a rescue with Hank firing arrows, Bobby smashing rocks down on Venger and Presto conjuring a horn and making a loud honk that startles nightmare. Eric intercepts and reflects one of Venger's blue bolts back at him. (Venger either creates a blue force field to protect himself or is enveloped by the force field function of the reflected bolt.) Then a red mystical bolt shoots from off screen and hits Venger, catapulting him into the distance and removing him from battle. The heroes congratulate Eric but he denies knowledge of the red bolt. The mystery of who is behind the bolt is never solved.
The deflated beholder slips down a fissure, presumably escaping to the Underworld, and the valley returns back to being vegetated.
Eric denies being scared of the beholder and sits down on a rock where Presto's discarded horn is. The resulting honk frightens him and it cuts to a chuckling Dungeon Master sitting nearby.