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Episode Title: The Magic Roundabout.
Episode Description: The film begins as the wizard Zebedee, a red jack-in-the-box-like creature, is having a nightmare about being chased by a rampaging blue jack-in-the-box creature named Zeebad.
The film then starts with Dougal sneaking around the carousel. He goes so far as to place a tack in the road to pop a sweet cart's tyre, thinking to be rewarded for watching the cart. After convincing the driver, Mr. Grimsdale to leave, Dougal accidentally starts the cart up again and causes it to crash into the titular magic roundabout at the centre of the village. A blue jack-in-the-box creature named Zeebad (the same one from Zebedee's nightmare) emerges from the top and flies away, followed shortly after by a Foot Guard figurine that is thrown off the roundabout. The roundabout freezes over, trapping repairman Mr. Rusty, Dougal's young owner Florence, and two other children named Basil and Coral within an icy cell.
The villagers, who are all animals, are horrified by this development, and call upon Zebedee for help. He explains that the roundabout acted as a mystical prison for the evil ice wizard Zeebad. With it broken, Zeebad is free to work his magic on the world again (it is implied he started the first ice age). The only way to stop Zeebad's freedom from freezing the world again is by collecting three magic diamonds (one of which is supposed to be hidden on the roundabout, while the other two are hidden at separate locations far beyond the village); placing all three diamonds in their respective slots on the roundabout will re-imprison Zeebad and undo his magic, but if Zeebad retrieves them first then their power will allow him to freeze the Sun itself. Zebedee sends Dougal the well-meaning cheeky chappy but slacker dog, Brian the cynical snail, Ermintrude the opera-singing cow and Dylan the hippie rabbit, to accomplish this mission along with a magic train who can be summoned by a magic remote. Meanwhile, when Zeebad crash lands after escaping the roundabout, he animates the Foot Guard figurine, Sam the Soldier, to be his henchman and enlists him to find the enchanted diamonds first. Meanwhile, Zebedee's fellowship makes camp in the icy mountains near Zeebad's old lair. Dougal wanders off during the night and is captured by Zeebad. Ermintrude breaks him out of his prison; after a short chase, Zebedee shows up to battle his evil counterpart. Zeebad eventually gains the upper hand, freezing Zebedee and collapsing the cliff on which he stands, presumably killing him...