On New Year's Eve, an amorous Rex invites himself into Lucy's hotel room and overstays his welcome as Kevin hides in the bathroom. When Rex goes into the bathroom, Kevin hides out on the ledge. Rex snoops through Lucy's medicine cabinet and swipes some of her pills. Scott and Eve share a New Year's kiss but Scott abruptly calls a halt to any further passion. Later, Dominique's spirit visits both Serena and Scott in their dreams to say good-bye and Dominique encourages Scott to get on with his life. After basking in the afterglow of making love, Julie tells Frank she wants to keep their affair secret. However, her plans are ruined when Eve catches her coming out of Frank's bedroom half-dressed.

Despite Kevin's warning about social services, Eve takes Daniel to visit Ian at their apartment. The court appointed counselor arrives and they are surprised to learn the court has granted them back custody of Daniel. Eve and Ian then ponder the future of their marriage. Lucy confesses to Kevin about her affair with Ian and he surprises her when he says he already knew. They decide to take a break from their relationship and cancel their Christmas party/surprise wedding. Alison offers her support to Jamal if he wants to pursue a relationship with Hope, however, Jamal says he doesn't want to interfere in her life. Later, Jamal offers a homeless Valerie a place to stay- with him and Alison. Rafe tells Ali of his new assignment, reuniting the couples of Port Charles by Christmas Eve. Ali offers her help and Rafe comes up with a plan when he shows her the invitations to Kevin and Lucy's party.

When Kevin suggests Paige find another artist, she insists he paint her because, as her first love, he knows her better than anyone else. Jamal rejects Valerie's baby-making plan. Alison calls a halt to her passion with Rafe then goes home to Jamal. However, when she finds Valerie there, she gets upset and leaves. A jailed Ricky makes a deal with Casey to retrieve her mysterious key from the cops in exchange for her taking the rap for the jewelry theft. He gets her key back, but she starts a fire and they both escape. Kevin is given a surprise by Lucy. Paige reveals privately that she stole Victor's mysterious watch.

Kevin makes a bad impression on Christina when he accidentally breaks her doll. Lucy tries to convince her to give Kevin a chance but she makes it clear she doesn't like him. Victor mistakes Ricky for an alien, but Frank learns he's the fugitive who escaped with Casey and turns him in, despite Ricky's pleas that he's innocent. Paige gives Casey and Amy magnetic face plates to conceal their weird watches. Paige and Amy order Casey to stay in town- and stay out of trouble. Vowing to conceal their true identites, the three agree to meet regularly and are stunned when their watches all move backwards.

Lucy visits a hospitalized Kevin, who unleashes his anger on her, but Lucy can no longer take his abuse. Telling him to take responsibility for his problems, she leaves. Kevin's doctor tells Ian to stay away from Lucy to help Kevin, then prescribes unusual music therapy- the song ""Naked Eyes,"" which gives Lucy the creeps. Tess frantically searches for her baby (rag doll), just as Karen tells Livvie she's lost her unborn child. Jack comforts Tess with a fairytale. Livvie refuses to believe Karen's prognosis until Frank convinces Livvie to face the truth, but she disappears before a necessary medical procedure.