Rebekah is having difficulties adjusting to modern Chicago.  Good thing she looks pretty in every outfit she tries on!  Katherine confirms that Stefan has a plan for keeping the vervain locket away from Klaus and warns him about Rebekah, who is used to getting what she wants.

Ghost Anna is excited that Jeremy responds to her – she has been trying to get his attention for days but he hasn’t heard her.  He reveals that he was dreaming about her and perhaps this is the key.  Just in time, his new (and alive) love interest Bonnie arrives on the Gilbert doorstep to make him feel guilty.

Sheriff Forbes asks Damon to erase the memory of her ex-husband, Bill.  He also compels him to leave town.  Old Gloria uses her witchy powers to find the location of the locket, which burns Elena’s skin.  Bonnie examines Elena’s locket, but when she touches it, it shocks her.  Old Gloria tells the others that she has found the necklace and describes the girls.  Stefan distracts Rebekah and Klaus with hunting, then returns to find out what Old Gloria knows.

While Bonnie searches for the spell on the locket, it begins to float, proving that it contains its own magic.  Caroline questions Elena about her feelings for Damon, and Alaric tells Damon to back off for a while.  Anna tells Jeremy that whenever he sees Ghost Vicki, she feels darkness forcing her out of the way.  She is able to appear in our world when he thinks of her, a fact that he chooses not to share with Bonnie.

Stefan asks Old Gloria about what she experienced with the locket.  She wants it for herself, as it belonged to the original witch and holds great power.  She puts a spell on Stefan that renders him immobile so that she can torture the information out of him.

The Lockwoods have one of their many Founders parties.  Bill Forbes shows up, to everyone’s surprise.  Bonnie and Jeremy look through old reference books for information about the locket.  Anna appears and warns Jeremy that the darkness is there just as the books catch fire.  Old Gloria reads Stefan’s essence and sees not only that he loves Elena, the girl with the locket, but also that she is the doppelganger that Klaus thinks he has killed.  Before she can reveal any of this to Klaus, Katherine kills her with a dagger to the neck.

Bill is immune to compulsion.  He threatens to tell the town about Damon unless they put vervain in the town water supply.  When Alaric stands in the way of Damon killing Bill, Damon breaks his neck (temporarily, as Alaric is wearing the Gilbert eternity ring).  Katherine and Stefan conclude that Klaus is running from the Hunter.

Damon attacks Bill and bites him, but Caroline fights him off.  Elena confronts Damon about his recent behavior, and he retorts with “I am not Stefan.  How about you stop trying to turn me into him?”  Jeremy shuts out Anna because he doesn’t want Bonnie to know he still thinks about his dead girlfriend.

Stefan asks Rebekah who she and her brother were running from in 1920, but she refuses to name him.  She tells Stefan that Klaus admires the way he’d sacrifice anything for his brother.  Rebekah slips and mentions the Hunter’s name, Michael, in front of Stefan.  She suspects that Stefan is not really on their side.

Caroline forces Elena to confess that she has developed feelings for Damon.  Bill thanks Caroline for healing him with her blood, but then says, “You’re a vampire.  I don’t think you’ll ever be okay again.”  Alaric demands a place on the Founder’s Council as a Gilbert family representative.   Bonnie gives Elena back the locket, but too late, realizes that she gave it to Katherine.  Katherine picks up Damon for a mysterious road trip, and Klaus shows up in Mystic Falls with Rebekah and a horrified Stefan.

I like that this episode stayed true to Damon’s character.  He’s flirty with Elena, and it’s obvious to the audience at home he loves her, but when he feels controlled he rebels in a major way.  He does what he knows is the dangerous choice – leaving with Katherine.