As J’Zhirr continues down the third path, Sheogorath talks about Pelagius’ mother who wields fear like a cleaver. She taught Pelagius that danger could come from anywhere, at any time and delivered by anyone.
The path ends at an arena where two atronachs are battling it out. Sheogorath says the objective is to use the Wabbajack to defeat the enemy while they do the same. But when J’Zhirr uses the Wabbajack to destroy an atronach, another just appears to take its place. Sheogorath suggests that this one’s aim is off.
In frustration, J’Zhirr points the Wabbajack at the people opposite. An energy ball shoots out and hits the sitting armored guards. They vanish and Sheogorath cries out in surprise. He thought that J’Zhirr would never figure it out. Sheogorath says that now the threat is gone, Pelagius is under the delusion that he is safe, which means that this one has helped him, sort of.
Sheogorath says the next path that J’Zhirr chose is the path of dreams. Next, Sheogorath informs that unfortunately Pelagius suffered from night terrors from a young age. J’Zhirr’s task is to wake the young Pelagius from his sleep. It is not easy. J’Zhirr tried all ways and means, even jumping on the bed and stomping all over Pelagius. However Pelagius still remains sound asleep.
In a moment of inspiration, J’Zhirr uses the Wabbajack to cast a spell on Pelagius. A wolf appears and rushes at the sleeping Pelagius. When J’Zhirr uses the Wabbajack on it, it turns into a harmless goat. When J’Zhirr uses the Wabbajack on Pelagius again, another creature from his nightmares appears. This time it is a bandit who turns into a little boy with the help of the Wabbajack. And on it goes. One by one, J’Zhirr calls up Pelagius’ night terrors and turns them into something harmless. When the last of them is vanquished, the sleeping beauty finally wakes up.
J’Zhirr hears Sheogorath’s voice as he walks down the first path. Sheogorath says that Pelagius hated and feared many things but the deepest, keenest hatred was for himself. Sheogorath explains that J’Zhirr is seeing the attacks Pelagius carries out on the weakest part of his fragile self. The self-loathing enhances Pelagius’ anger but his confidence will shrink with every hit.
Using the Wabbajack, J’Zhirr casts spells to shrink the attackers and make the victim bigger. Once the task is completed, Sheogorath congratulates J’Zhirr, saying that Pelagius is ready to love himself and continue hating everyone else
After Pelagius left, J’Zhirr speaks to the jolly man. He turns out to the Sheogorath, the Daedric Prince of Madness. Suddenly the old man’s words start to make sense.
Sheogorath talks too much and is easily distracted. But finally, J’Zhirr manages to deliver the message and gets him to agree to end his holiday. Sheogorath says he will leave but first J’Zhirr must find the way out. He reveals that we are now in the mind of a dead, homicidally insane monarch, Pelagius the Mad. To help with the task, Sheogorath gives J’Zhirr a magical staff called the Wabbajack. It has three faces with open mouths carved into the tip. The faces sort of resembles Sheogorath.
There are three paths leading off from the tea party area. J’Zhirr will take the first one and sees what happens.
J’Zhirr finds two men sitting at a table having a tea party. One of them seems to be having a good time and while the other seems preoccupied. The jolly man addresses the other as “Pelagius” and reminisces about an event that involved butterflies, blood, a fox, severed head and cheese. He seems to like the cheese a lot, saying that it is to die for.
Pelagius is unimpressed and J’Zhirr gets the feeling that the jolly man has talked about it too many times. Pelagius tells the man to leave him to his ceaseless responsibilities and burdens.
While exploring the second floor of the Pelagius Wing, J’Zhirr is suddenly transported and reappears in a strange place. Apart from a new set of clothes, all of J’Zhirr’s belongings have disappeared. While J’Zhirr is upset about losing his belongings, there are more pressing matters. Like figuring out where is this place. Something tells J’Zhirr that he is no longer in Tamriel.