After a good night's sleep, the party awakes and heads downstairs into the common room of The Duke's Rest, to find that their benefactor Ernst Wolf Ribbentrop has left for the day on business, leaving them each a small stipend of coins and some instructions with the innkeeper, Herr Hill.
They are instructed to deliver a wooden box to the local Herbalist's shop, and are advised — for reasons not stated — to stay away from the harbor district and not to cross the river into the wealthier district of Kusteburg. Afterwards, they are to show Ugo around to some tradesman's shops, to see if he sees a trade that interests him. Siegfried — being the most familiar with Kusteburg — takes the lead, and drops the box into a sack, which on second thought he hands to Ugo to carry.
The party sets off, and finds it is a generally normal day in Kusteburg, with the townsfolk bustling about their business. They encounter a pair of street performers who seem utterly disengaged with their work, not even bothering to thank a passing citizen who drops a coin in their cup. Siegfried notices and comments on their lack of flair, which prompts Ugo to approach them – with Siegfried hovering protectively just behind - and ask what they are doing, which they answer curtly and brush off further inquiries with gruff unfriendliness. Despite this, as far as the party can tell they are just poor street performers, and so our heroes move along to their destination.
They are greeted by the shopkeeper, Anne The Herbalist, who eagerly opens the proffered box to reveal five rare mushrooms from the Eisenwald Forest. Inviting the party to come along, Ann goes down a hallway into a dimly lit back room, where she (evidently) begins talking to a plant and placing the mushrooms in front of it.
As their eyes adjust to the dimness, the party approaches to discover that the plant is, in fact, a large mushroom itself. More interestingly, this mushroom possesses arms, legs, and eyes. More interestingly still, this mushroom is moving around of its own accord. Startled at first, the party quickly warms to the little creature as it absorbs the medicinal mushrooms provided to it, becoming even more active as it does so. Anne explains that the creature's name is Buu, and he was found in a somewhat sickly condition by mushroom hunters in Pilzstadt. He was then passed on to Wolf by the Mayor, who mutually agreed to keep him a secret, which the party generally agrees was probably wise, and Wolf in turn left him with Anne, hoping her expertise in herbs and fungi could shed some light on Buu's nature. For his part, Buu seems to be currently content with this situation, responding positively and even warmly to Ann and the party, though he rebuffs Evonni when she asks to pick him up.
The creature can communicate mentally with Anne, but not the party, and she surmises that extended exposure is required to speak to it and hear it in this way. Nonetheless, Buu can understand the party's words, and makes himself understood to the party as best he can with gestures, nods, and head shakes, with Ann relaying more complex messages.
Shortly, Anne hears other customers enter the shop up front, and leaves to attend to them while the party continues watching Buu in rapt fascination, as the little mushroom-creature revels in his new vigor and mobility, moving around the room and inspecting the various raised planters. Ugo comments that this is much more fun to watch than the surly performers outside, and Siegfried agrees, saying that Buu's capering would probably bring in a lot more coin than half-hearted juggling, but also that it's probably for the best that Buu is not subjected to that kind of public exposure. Evonni attempts to ask Buu how long he's been with Anne, and so Buu attempts to communicate the concept of "ten days" by pointing to a sunbeam and then making ten lines in the dirt, but Evonni is unable to make sense of it.
Ugo then hears something from the front, and when he listens closer realizes that it is angry shouting. Thinking that the Herbalist might be in trouble, he alerts his friends and bolts towards the shop front, with the rest of the party and Buu following.
They find a group of armed men threatening Anne. Ugo rushes in and strikes a glancing blow to one of them, but is pushed back. The men advise the party not to intervene, appearing to be single-minded in their objective — the man Ugo struck is the apparent leader and says they are there to reclaim their property. Buu attempts to stay out of sight behind Evonni, but the leader of the brigands catches sight of him and advances, saying that Buu is the "property" he has come to take.
Since no real justification for their invasion of Anne's shop was provided, Siegfried interposes himself between the leader and Buu and engages the head brigand in a sword fight. Buu, surprising everyone, somehow produces a cloud of fog to obscure himself and Evonni. Evonni takes advantage of this, darting out of the fog to loose arrows at the enemy and then darting back in to conceal herself, though aiming is difficult with so many of her allies around and enemies overlapping each other.
It goes poorly, as Evonni and Siegfried are the only well-armed members of the party. A club-wielding thug grabs Ugo from behind and holds him fast despite his struggling, and in so doing breaks the chain around Ugo's neck. The moment he does so, Ugo finds himself in a forest, in the company of a white bearded man and a white horse. The old man introduces himself as, and says he has been watching Ugo. He claims he is an ally of the forest itself, who seeks other allies to protect the Eisenwald, and to fight injustice, those who would do harm, and — he makes a point of mentioning — bullies. As Ugo watches in a mixture of amazement and unease, Cheim reaches into the horse's body and — seemingly without causing pain or damage — draws forth a clean white rib and offers it to Ugo, saying that this will be a symbol of Cheim's alliance with him, and that he is not to lose it. Ugo, somewhat reluctantly accepts the gift, and feels a rush of power. Cheim bids him farewell, and Ugo finds himself sailing away through the air before reappearing in the shop, behind the thug that had seized him.
Ugo grins, and with an instinctive gesture of the bone wand that sends nearby flower petals swirling around the thug, the man sways on his feet, and then collapses to the floor as though he fell into an exhausted sleep. The party is amazed, but has no time to react as they are occupied with the other thugs and their uncommonly skilled leader, whom Siegfried struggles desperately to match in swordplay.
Another of the thugs starts to advance and Coge tries to seize him with a curious technique used at the monastery, but as he does so the crystal around his neck starts to glow, and the technique proves to be a somatic motion that unleashes a ray of frost on the thug. With all the thugs thus engaged with the party, Anne darts through door to the storefront.
Still struggling to hold their own, Seigfried scores a few hits on, who is then buffeted along with another of the thugs by a roaring breath of frost exhaled by Koge. Ugo then manifests another ability and strikes at the leader with an coldly lashing vine of withering force, but the leader keeps his feet still, and in a flurry of attacks strikes down Siegfried. Ugo roars in anger, projecting a dread presence that pauses the leader's advance momentarily, but the leader shakes it off after several seconds and manages to wake the thug Ugo had put to sleep.
Buu attempts to intervene, causing vines to erupt from the ground and grasp at the thugs, but the brigands break free of them. Coge backs towards the door, hurling icy blasts, but most fail to find their mark as he is forced to aim around his rapidly falling allies. Ugo succumbs to the leader's seemingly invincible assault and falls alongside Siegfried, as Evonni blocks the door. The leader tells her to stand aside, to which she bravely refuses, but with all the thugs converged on her she is struck down just the same. The thugs head into the fog to search for Buu, who manages to stab one in the leg with a dagger before the other three seize and disarm him, and then stuff him in a sack.
While the thugs are thus occupied, Coge follows Anne to summon help, and finds her already on the way with the city guard. As he calls out them the, the thugs push past him and flee down an alley with Buu. The watch arrives with Ann, who rushes into the shop as the guards pursue the brigands. Anne binds the wounds of the fallen and prevents them from dying, while Coge elaborates on the situation to the guard captain, skirting around the sensitive issue of Buu by describing him as a valuable mushroom which the thugs have stolen.
Just then, the other guards return and inform the captain, Anne, and the party that the thugs had a boat waiting, and have unfortunately escaped by water with their "stolen mushroom".