Everyone quickly piles into the sleigh and they take off after Crazy Quilt who is heading toward the North Pole. If Crazy Quilt makes it up the pole to the Misty Folk, he will escape with their star. As Paddy hangs onto the dragon he has an idea and yells "Boo!" and he falls down the pole. At the bottom of the pole they all scramble and the next thing the kids hear is Mother gently waking them up. The kids were tangled in the crazy quilt coverlet in the attic. Judy and Jimmy wonder what's been going on and Mother has no idea what they were doing all that time. To thank Paddy, they promise to hang the small, stuffed bear on the tree every year.
The star is finally back with Judy and Jimmy and they are ready to get back home in time for Christmas. Crazy Quilt decides to stay in Snow Country while Paddy, Judy and Jimmy are going to head home in Santa's sleigh. As Jimmy climbs into the sleigh, he asks Crazy Quilt to hold the star which was a mistake. Crazy Quilt takes off with the star...again.
Queen Melissa tell's Santa that Wintergreen escaped from her confinement and is heading toward Snow Country. Santa quickly sends Captain Tintop reinforcements to help take on the witch. While the battle rages on elsewhere, Santa takes the group on a tour of his workshop. They finally get word that Captain Tintop has won the day and is returning with the star!
Jack quickly raises the window to see the Bad Dolls running away with the star. Santa wastes no time calling out the tin soldiers to chase down the dolls. Captain Tintop radios Santa to let him know that they are having problems because the Bad Dolls have an ally, a creature they have never seen before.
After welcoming everyone, he asks his flyng reindeer to take the friends to to see Jack Frost. In no time, Jack fixes the star so well you can't even tell it was broken. Jack places the star on his window sill to cool but when it's time to go, the star is gone...again!
They take off in the flying hat heading for the Snow Country. According to the queen's instructions they must find a person called Nicky Froodle. A snowman they meet along the way points them to a castle where an elf named Nicky resides. He takes them to the man himself, Santa Claus.
Wintergreen is still really mad at the group and is about to turn them all into frogs but Queen Melissa took away her powers. The Grand Wunky appears to arrest the witch but he forces her to return the star before taking her away. Tired from their adventures, the group falls asleep. After some time they awaken to find a giant flying hat.
The group meet Chief Cook'n Bottlewasher who really liked Crazy Quilt's colorful skin. The Chief wants to take Crazy Quilt's skin but Judy talks him into taking her mirror. When they reach the Golden Grove, Wintergreen Witch appears, demanding the broken star. Without the mirror, Jimmy is forced to give the witch the pieces.
Just before sinking into the mud, the Cockleburr Cowboys ride to the rescue. The quartet are happy to find out that the cowboys work for the queen and through them they can speak to the queen once again. The queen is very understanding and gives them new instructions sending them across the Purple Plain to the Golden Grove to find the Singing Tree. As they are looking for another clue, they hear frightening screams.
There is only one way to rescue Paddy and that is to use the only wish they have. Tired and disheartened, Paddy, Judy, Jimmy, and Crazy Quilt make their way back to see Queen Melissa for more instructions. As they try to cross a river of mud, they meet the Muddler's who throw the group into a swamp.