All the ponies are forced to evacuate as the castle and the surrounding land are submerged by the Smooze.
Hydia releases the Smooze which rages towards Dream Castle, trapping Spike and Baby Lickety-Split inside a mountain. Her daughters go and collect the ingredients for the Smooze, leaving out the flume, an ingredient that they are afraid of retrieving. It will also make anyone splashed by it grumpy and woeful. The ponies send out a search party to find Baby Lickety-Split and Spike, while Hydia decides to concoct the Smooze, an unstoppable ooze that will bury and destroy everything in its path. Meanwhile, Reeka and Draggle attempt to ruin the ponies' festival by flooding the area, but thanks to the Sea Ponies, end up getting washed away in an overflowing waterfall. She is rebuked by everyone and runs away, followed by Spike, only to end up falling down a waterfall and trapped in a valley.
During the baby ponies' dance performance, Baby Lickety-Split attempts to add her own dance and ruins the whole performance. Meanwhile, at the Volcano of Gloom, a wicked witch named Hydra is planning to ruin the ponies festival, but her two incompetent daughters, Reeka and Draggle, are not up to her family's standards of wickedness, and she laments about it, before sending them off to ruin the festival. Elsewhere, Baby Lickety-Split is practicing a new dance step, as Spike, a baby dragon, accompanies her rehearsal on the piano. At their home, Dream Castle, the ponies are running and playing through flowery meadows and grassy green fields with their animal friends.
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