We begin at Grimholt, where Matunaaga has just brought back the news that Ivar has turned into a dragon. Skallagrim quickly decides to send for help. He sends huscarls across the river to muster up Brygjafaelers, as well as messengers to Syfjaourholur, Vignir's homesteads, and Thorgerd and Arnor's homestead. By late morning,they have begun to muster some three dozen men on the shores of the river. 
Three men scout Tjaraholt itself, including Bjarni, Matunaaga, and a third. Poul warns Bjarni not to try to take on the dragon alone. They go to Tjaraholt and find the gates broken, with horrible piles of dragon dung and human bones everywhere.
Proceeding out from Tjaraholt, they find tracks of the worm leading North in roughly the direction of the Tjaraholt barrow. They split up to scout. Deep in the woods, Bjarni sees the end of the dragon, which emerges from the woods to reveal it is about 30 feet long.
Dragon (to Bjarni): Are you alone?The dragon laughs at this. Bjarni provokes the dragon with news of Skalagrim, figuring that Ivar/Dragon hates Skalagrim so much that it will be distracting. It works. 
Bjarni: I'm not alone, I'm just the bravest and the fastest - I'm the head of the spear.
The dragon threatens to eat him or parts of him -- makes Bjarni drop the sword he's carrying - Oathbinder, Poul's sword - and flames his back as he runs "to bring Skalagrim to me". 
Meanwhile, back on the shore, the Brygjafaelers have been joined by Melnir and his men, who was prophetically informed by Silksif of the need to be here. However, morale is low as they hear of the supernatural beast they are facing. Maushop is sent by Poul to the river to ask the fire-serpents for help, and others pray as well. Lofthaena and Kjartan overhear him speaking agitatedly with the water, saying "but he's my brother!" as if in protest to the serpents.
Bjarni then arrives with news of the dragon, his back burnt by its flames. The mustered men then converge on the Tjaraholt barrow where we think that the worm that was Ivar is. There is no sign of life outside, but the door-stone is cast aside. Poul goes into the barrow alone.
Standing in the entry passage to the barrow, Poul sees the ghosts of Killer-Gest and Bront standing within.  Proceeding inside, he sees the worm to the left curled up in a tall pile. He feels Bront's cold bony hand on his shoulder...
Poul: "I'm not surprised to see you."Poul bargains with Bront. He offers Bront a chance to clear the family honor -- come back from the dead and fight the worm.
Bront: "I'm surprised to see you - this is not your place."
Poul: It is, brother-in-law. Ivar brought shame on our family...
Meanwhile, back outside Silksif has gone into a trance on top of the burial mound. A storm begins to gather above her, but then strange shapes begin to appear in the gathering clouds. 
Liz plays (secretly) Painful Injury card, specifying that kjartan will put out an eye of Ivar's but also lose an eye after calling on Odin.
Poul, Skalagrim, and Kjartan go into the barrow. (did someone play a card here?) Skalagrim stabs the dragon in the eye! Poul goes in with the axe with his paralyzed hand but the hand betrays him! Kjartan - runs up and stabs the dragon in the eye - the dragon's spiked tail lashes around and puts out Kjartan's eye. The dragon remembers it can breathe fire.
We run. The dragon comes whomping out.
We plink ineffectively against the dragon for a while. It goes after Skalagrim - burns him. Poul's arm attacks Honiahaka! twice. Maushop suddenly beheads Honiahaka - his own foster brother - while he's down on the ground with two severe leg wounds.
Heather plays Internal Conflict on the dragon. The dragon quits going after Skallagrim and ...