When Flicker is polishing Excaliburn for King Allfire, Sir Loungelot takes it and tries to cut one of Queen Griddle's fruitcakes with it, but the fruitcake is so hard that this causes Excaliburn to break. Flicker tells Loungelot that only the Lady of the Lake can fix Excaliburn. Flicker and Loungelot go to the Lake, where it is revealed that the Lady of the Lake is Loungelot's mother, who gave him up to Allfire. She says that she can't fix Excaliburn because Loungelot forgot to renew the warranty, and must be challenged with three tests to fix the sword, and if it is not fixed before the night is up, Camelhot will perish.
Flicker and Loungelot encounter their first test, a bridge guarded by a man named Ollie, who challenges them to make him laugh in order to cross the bridge. Flicker suggests that he and Loungelot fly over, but Loungelot runs at Ollie to attack him, slips on a banana peel and falls in the mud. This is enough to make Ollie laugh and he lets them cross, giving Loungelot his robe.
Meanwhile, Camelhot is cursed, with fog and mold growing everywhere.
The second test is a swamp. There is a donkey to ride across, but a bird tells Loungelot that he can only ride the donkey when he gets his lunch, and bites off part of his hair to take his lunch. The donkey is pricked by thorns stuck in Loungelot and sends him flying into the swamp.
The third test is a mermaid in a boat, who says a knight must kiss her to set her free. This proves a lot easier for Loungelot than the other two tests, until he kisses her and she is returned to her true form, Hydi the Hag of Horrible Hexes. A sea serpent appears and ties Loungelot up as a punishment.
At nighttime, Flicker and Loungelot arrive at a temple to find it is inhabited by monks, including Loungelot's brother Murray. With his robe and balding head, Loungelot resembles a monk as well, and realizes that the Lady of the Lake set the tests up in an attempt to get Loungelot to join the choir. Loungelot walks outside and raises Excaliburn, yelling that he'll get revenge on the Lake of the Lake. Lightning strikes Excaliburn (presumably caused by the Lady of the Lake) and fixes it, breaking the curse on Camelhot.
Loungelot tells Allfire and Griddle that he saved Camelhot, but doesn't tell them that he broke Excaliburn. When he swings Excaliburn, he accidentally knocks over the Holy Grail and shatters it.
- Count Geoffrey and his Evil Knights do not appear in this episode.
- Princess Flame does not have any lines in this episode, except for an "Ahhh" when she faints.
- When at Ollie's bridge, Flicker says "Why don't we just fly over?" This is one of the few times anyone suggests flying over an obstacle, as the dragons often seem to forget that they have wings at such obstacles (particularly in Seven Dragon Sins) yet are shown flying at other times, although it is true that Blaze, and possibly other dragons hate flying).
- Also, though Flicker considers flying over the chasm, he never considers flying over the swamp.
- Fourth and final appearance of Racka and Presley.