There's an art thief in town, so George and Jim are on the case. There's also a new family in town -- the Cotten family. Jim saves the dad, Dave (Rick Schroder), from getting hit by a bus. Dave, his wife and their two kids, who are just Daphne and JJ's age, pursue a friendship with the Powells. Jim shies away from the idea at first, but Stephanie insists they give it a shot, since these are nearly the first guest stars who haven't been out-and-out hateful to the Powells. In the course of investigating the art heists, Jim starts to suspect Dave and questions him. It's not naïve Dave who is the thief; it's his wife. Stephanie confronts her new friend with the truth, but gives her time to come clean with her family. Wifey takes that opportunity to pull off another heist. Stephanie confronts Wifey in an alley as she's meeting up with her partners in crime. One of the guys takes a shot at Stephanie, so Wifey takes a bullet for her. She doesn't die though, because there are few consequences on this show.
Elsewhere, Daphne runs for student council at the encouragement of her Cotten, and JJ gets closer to his geek goddess after his Cotten prods him to do so. But the big news is that our Katie is a virgin. Well, she starts the episode that way. She ends it in bed with the Watcher "Joshua," who has just told the Evil Dr. RevCam King to take his job and his green goo, and shove it. Sadly, like most men, "Joshua" falls asleep right after the loving. Katie gets up to putter around, and like you do, she picks his clothes up off the floor and smells them. And it's then that Stephanie's red journal falls to the floor. Poor Katie leafs through it, realizes what it is, and we watch with our hearts in our throats as her after-glow is doused with a bucket of icy betrayal.