Picard is enchanted by his first visit, and invites Bev back for a second go, along with a historian, one Mr. Whalen. Data, curious about the character's attraction, quickly reads all the literature Dixon Hill ever appeared in, and requests to go along. The three males enter (Beverly will be along later), where "Dixon Hill" is arrested for a murder he didn't commit.
Once they're inside, a Jaradan long-range probe shakes the ship, and somehow causes problems in the holodeck controls. The doors let Beverly in shortly afterwards, but then no one can get out. As the ship nears the rendezvous point, Riker sends Geordi to get Picard out of the holodeck, only to find that no one can get in or out. Geordi and Wesley immediately get to work.
Meanwhile, inside, Picard/Hill is released after being interrogated. The four return to his office, where they are threatened by Felix Leech, a Peter Lorre-type bad guy. Whalen tries to get the gun away from Leech, and Leech shoots him, physically injuring Whalen. Since the holodeck isn't supposed to allow that to happen, Picard realizes something's wrong. He knocks the gun away from Leech, who flees. Picard tries to call for the exit and encounters no response.
Later, as work on the outside continues, Leech appears with his boss, Cyrus Redblock. Hill's detective friend, Lt. Bell, appears and is imprisoned with the others. Redblock demands that Hill turn over "the item," which he had been contracted to find, and responds to Picard's plea that he is not Dixon Hill by threatening Beverly's life.
Eventually, Geordi and Wes get the doors open. Redblock, now convinced, still holds Picard and the others at bay, and then exits the holodeck with Leech to plunder this new world, where the two quickly dissolve. Picard returns to the bridge just in time to deliver the Jaradan greeting perfectly, and the ship moves on.