The episode opens at night, with Wood Man enjoying his new boat. Then something rises out of the water and wrecks his boat.
The following day, Hilda, Frida and David are on the beach. Frida is practicing a spell to mentally connect to other creatures; something Witches to do bond with their familiars. Then David notices something going on nearby. A large group of sailors are complaining to Ahlberg about how the Lindworm is supposedly attacking and sinking their ships. They demand action, and Ahlberg is willing to launch an attack on Cauldron Island to stop the Lindworm. Hilda knows the Lindworm is innocent, but nobody listens. She even suspects that Erik himself is behind the sunken ships. Then she finds Wood Man’s head floating in the water without his body. He informs her that there really is a monster that is attacking boats, but it’s not the Lindworm.
The three friends plan to save the Lindworm, and Wood Man’s body. Hilda makes up an excuse not to go on a picnic with Johanna that day, claiming that there's a Sparrow Scouts meeting, which disappoints Johanna. Alfur knows something is up, and fears that Hilda’s lying will eventually get her in trouble. To get to Cauldron Island, the kids once again summon a Water Spirit to give them a ride. Once on the island, Hilda tasks David and Alfur with finding the Lindworm to get her to safety, while she, Frida and Wood Man will try to find out what is really attacking the ships. Wood Man, who speaks Water Spirit, asks the spirit for help, and it lets them ride inside it so they can go underwater without drowning.
David and Alfur soon run into the Lindworm. She has no intention to leave; her code states that she will never back down from a battle. Alfur has a plan. He sends a message by Elf Courier to the Lost Clan, and asks them to come to the island. The idea is that they will pretend to attack the Lindworm and lose, so the Lindworm can have her battle and leave the island without violating her code. Unfortunately, the Lost Clan never back away from a fight either, and they attack for real.
Meanwhile, underwater, the girls discover that Ahlberg modified the sunken bell to ring automatically. They then find a ship graveyard, maintained by a draug. The draug informs them there is something in the fjord that frightens him. The girls follow the sound of this thing, and find that it’s a young kraken. The creature is too small to be the monster that attacked Wood Man’s ship, so Frida tries her magic to bond with the creature, and thus learns they need to get back to Cauldron Island to find the real culprit.
On the island, the battle between the Lindworm and Lost Clan is still ongoing. And to make matters worse, Ahlberg arrives with his fleet. They fire their harpoons. Luckily, their aim is way off, but one harpoon gets embedded deep in the ground. Suddenly, the whole island begins to shake and rises up; Cauldron Island is actually the head of an adult Kraken. Wood Man claims the Kraken should be asleep for another 175 years. Hilda realizes the underwater bell woke it up.
The Kraken makes short work of the fleet. She wrecks the metal ships, and feeds the wooden ships to her children. Hilda realizes the Kraken just wants to feed her children, and tries to tell her about the ship graveyard they saw earlier. David tries to rally the Lindworm and the Lost Clan to attack the Kraken, but they realize this is a fight they can’t win. They retreat from the island instead. The Kraken attacks the girls and grabs Frida. Encouraged by Hilda, Frida magically bonds with the Kraken and tells her about the sunken ships. Ahlberg is not done yet and fires one more harpoon, but the Kraken easily intercepts it. Ahlberg orders a retreat. The Kraken takes her children to the ship graveyard so they have all the food they want. She also breaks the bell. One of the young Kraken returns Wood Man’s body to him.
With another adventure over, Hilda returns home, but there she finds out Johanna knows she lied about there being any Sparrow Scouts activity that day. Johanna punishes Hilda by grounding her and forbids her from leaving the building until further notice.
- Trolberg Safety Patrol
- Peg legged sailor
- News Anchor (cameo)
- Raven Leader (mentioned)
- Despite the fact that Hilda got grounded for lying to Johanna in this episode, she lied to Johanna about where she was but didn’t get grounded in The Troll Circle.
- Although in that episode, Johanna didn't know that Hilda was lying.