Gwyn is tired of being a magician: he finds it a burden. He's been the same size since he discovered his powers and now he wants to grow.
The only one of Nain's gifts left is the broken wooden horse, with the ancient tag on its neck reading "Not this!" Gwyn has always kept it hidden under the floorboards, but now something compels him to remove it. Nia's little brother, Iolo, finds it and drops it in the river, accidentally freeing the demon trapped inside the horse. Desperate, Gwyn and Arianwen, the snow spider, cast a spell to capture the demon, coinciding with the arrival in the valley of Evan, Nia's cousin, and unwittingly trapping the demon inside him.
Evan becomes increasingly obsessed with Catrin, Nia's sister, while Nia herself is besotted by Evan. Gwyn is alone in fearing Evan, and has to reach his ancestor Gwydion for his help. Armed with Gwydion's wand, Gwyn fights the demon, and seems to have banished Evan form the valley, for which Nia will never forgive him. But Evan returns, and everyone finally finds peace.