Sarah has walked into Jareth's trap, which features a puppet show before a goblin audience. The show follows Sarah's entire life, including her forgotten adventure in the Labyrinth and ending with how her life has become mediocre. Recognizing Jareth at last, he offers to guide her with the last of his power and let her dreams thrive again before taking her into the world of the Labyrinth. In the dreamtrap, Moppet realizes the flaw within the dream and how Sarah was forced to give up her dream of studying at Juilliard to become an actress. Moppet, now awake, sets off with Moulin, Hana, and Stank to find Sarah and stop Jareth's plans, and they are freed from Toby's prison by Hoggle and Ludo.