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Capital of Illusion (幻の都) is the tenth episode of .hack//Legend of the Twilight.
The Episode starts off in a hospital where 2 doctors are discussing how all their patients fell into comas while playing the same game. We then hear an executive from CC Corp telling Reki that he is in charge now that Magi is in a coma. After revealing that they intend on reporting to the media that the true cause of the incident was no more than a prank, Reki asks about the Wandering AI. The executive approves the usage of system management clause 318.
At their hideout, Shugo's Group is discussing the news about the incident with CC Corp claiming they are not responsible. They start talking about the rumors and theories on the message boards only for Ouka to comment that they have too much free time. Reki is then shown lamenting over his promotion, and after accidentally walking into a female PC's breasts, is slapped in the face. Sanjuro then comments that The World is easier than reality and asks Reki what he is planning. Reki reveals that he isn't qualified enough to become system administrator & has no desire to pursue the job.
Back at the hideout Shugo exclaims that he wants to go find Rena, however Ouka comments that the AI can destroy entire areas and that they should be careful not to end up like the Cobalt Knights. Sanjuro then arrives and says they should be level-headed. After Hotaru asks, Sanjuro explains that a wandering AI is unused NPC data that learns its own consciousness. Shugo then comments that they saw Rena and says that as long as he has the bracelet they can do anything; only for Sanjuro to reply that only Shugo can use it. Sanjuro then suggests that they think things through and decide their path tomorrow.
The scene cuts to Rena in the dungeon: Rena realizes that Shugo must have come searching for her and decides not to give up. The next morning Shugo is met by his party members who all have decided to go with him. After Balmung loses at Shogi, Reki asks why he logged into The World to play Shogi alone. Balmung then replies that he's a regular player & asks Reki why he came there. Reki then says it may have been to make fun of him, then admits it was a lie and asks Balmung about his past, saying it must have been amazing to fight side-by-side with Kite, although it may be better sulking all alone in the woods. Reki then asks if Balmung was just a regular player during the 1st Twilight and gives him a master key card.
Shugo's party arrives at the Root Town Naval Monte, where Ouka comments that they won't have to waste time Gate Hacking to get into each dungeon and Sanjuro states the area with the Wandering AI is connected to Naval Monte. They comment on how it doesn't feel right that there are no people there and Sanjuro claims it would be best to assume that common sense no longer applies before a monster appears in front of them.
The scene goes back to Rena: Rena then comments that the only landmark to where she is seems to be the dungeon's entrance and guesses that the area must still be under construction. When she decides to give up, Rena sees Morti and mistakes her for Aura initially, then asks who she is and where they were. Morti tells her that in order to transcend death it is important for her to understand it and that she had been thinking about death for a while.
After Shugo's Data-drain fails against the monster they are fighting, he is saved by Lord Balmung who then reveals that to defeat it they will need to work as a team. After the monster is successfully data-drained, Morti leaves Rena and the episode ends with the Wandering AI appearing before Shugo's Party and revealing her name to them.