Katie tries to warn Craig about Carly's bad reputation, but Craig encourages his sister to become friendly with Carly. Katie confronts Carly, accusing her of manipulating Craig. Carly assures her that Craig can take care of himself. Carly happily settles into her new digs. After Craig discovers the microchips in Carly's earrings, he excitedly kisses her. Katie walks in on the kiss and demands to know what's going on, but Craig reveals nothing. Lucinda welcomes Rose to her home and asks a skeptical Matthew to keep an eye on Rose for her until she returns. Lucinda leaves and Rose gets Matthew to loosen up. They bond and enjoy the "good life" together. On the brink of making love, Simon pulls away from Lily. He insists that he doesn't want Lily like this - he wants to be with her when she's free to be with him, no strings attached. Simon gives Lily one of his grandfather's love letters to hold onto until they're together again. She leaves. Holden is rocked when Lily returns and confirms that she was with Simon - and she asked him to stay in Oakdale. Holden decides to move out. Katie approaches Simon in the Lakeview bar. She warns him not to try to break up Holden and Lily - it's not worth it. Simon and Lily can't stop thinking about one another, while Holden is distraught about leaving. Meanwhile, Lucinda and Iva prepare to go to New Jersey. Iva fears that nothing will ever be the same for any of them again.