At Wolf Manor (ok, Stonehaven), the Pack mourns fallen member Pete.
The gang gets a whiff of the killer mutt's scent (the one that offed Pete) and race out after it. They find Pete's leather jacket hanging in the woods. Whoever killed Pete is taunting them.
Stressed, Clay and Elena change into wolves and frolick in the woods and flirt. Yes, wolves can flirt - which mostly involves them tackling each other and blinking a lot.
When they wake up in human form, naked and in each other's arms, Clay kisses Elena. She responds but quickly pulls away, telling him it was a mistake.
The sheriff tells Jeremy she's uncovered evidence that the little boy - whose body was found on Stonehaven property in Episode 3 - was actaully killed elsewhere. His body was just dumped there. This further convinces Jeremy someone has a vendetta against him and the Pack.
Elena and Clay trace the killer mutt's scent to a motel room. There, they find a scrapbook of killings (committed by a person, not a wolf). They piece together that the killer wolf is actaully a serial killer - someone turned a psychopath into a werewolf and sent them after Pete!
The parties responsible? Zachary Cain, a sworn Pack enemy, and Karl Marsten, the British dude from last episode who said he'd help the Pack! They show up at the motel with the killer mutt (in human form).
Elena (armed with the scrapbook) and Clay hide from the evil werewolves three, and report back to the Pack.
Nick shares that the killer mutt from last episode (the one killed at the rave) was an escaped con. This just confirms the theory that psychos are being turned into werewolves. Jeremy theorizes that Karl and Zachary want to destabilize the Pack in order to start a war between humans and wolves (the idea being no Pack = no group to keep psycho mutts in line).
Daniel Santos, an ex-Pack member, visits Logan and offers information on the killer psycho mutts if he can be let back into the Pack. Logan agrees to arrange a meeting with Jeremy.
The Pack heads back to the hotel room to bust the psycho mutt. It's booby trapped (Clay is nearly shot). Inside they find Pete's severed finger and writing on the wall, directed at Elena: "I'm coming for my scrapbook, bitch!" Ruh roh.