Billy's nephew, Kit, comes to visit the station

Mysterious cowboy Ned Kincaid arrives at Shining Time Station and instantly builds a bond with Stacy Jones. A jealous Schemer resorts to his old devious ways in an attempt to win over her interest.

It's Christmas at Shining Time Station! Stacy Jones is busy helping passengers, Schemer tries to win the role of Santa's helper for the Indian Valley Gala Holiday Pageant, Mr. Conductor tells the kids a story about Thomas the Tank Engine and his friends and helps them deal with a bratty kid, while a kind old passenger, Mr. Nicholas, arrives and brightens the holiday for everybody.

A Hollywood agent persuades Kermit the Frog to pursue a career in Hollywood. On his way there he meets his future muppet crew while being chased by the desperate owner of a frog-leg restaurant!