The episode opens with Stan, Kyle, Cartman, and a disembodied Kenny (sharing Cartman's body) playing "The Lord of the Rings." Stan's parents have rented the movie The Lord of the Rings (specifically, The Fellowship of the Ring), and tell Stan, Kyle & Cartman to bring it to Butters' parents, as they had asked to borrow it. Still caught up in their game, the boys see this assignment as a "quest", and set off on their journey. When the boys leave, Stan's parents try to watch Backdoor Sluts 9, a pornographic movie described as the most "hardcore" porno ever and the "single most vile, twisted, dark piece of porn ever produced." To their horror, they discover that Randy accidentally got The Lord of the Rings video and the pornographic movie mixed up, and realize that Butters is now watching it at his house.
The two drive to Butters' house, and come across the boys returning home, having already delivered the tape. Stan's father plays into the boys' imagination and sends them on their greatest quest ever: retrieve the tape, as it "holds an evil power." Excited, the boys eagerly comply and set off toward Butters' house. They arrive and take the tape, but not before discovering that Butters, though not realizing the nature of it, has watched the movie and becomes obsessed with it. Excluded from the game and denied the video, Butters becomes steadily more insane, and remains secluded in the basement, muttering about his "precious" and generally acting like Gollum. At this point the Marshes, who have grown worried that the boys have not returned, show up. Distraught at Butters' behavior, they assume that the boys now have the tape and are watching it. Contacting the other parents, they go on a desperate search to find their missing children and "put it into context."
Returning home, the boys run into some 6th graders, who look inside the box and realize that the tape is actually a pornographic movie. Although they try to take the tape, the boys are able to escape and decide to take it to the council of the High Elf of Faragon (Clyde). At the council, at which most of the fourth-graders are present (in The Lord of the Rings costumes), it is decided that to determine the tape's power, they should send one of their own to watch it for a few minutes. Talangar the Black (Token) is volunteered, and steps inside his house for a moment. He soon comes out, expressionless and dressed in street clothes, and announces, without explanation, that he's not playing anymore. Now truly convinced of the tape's power, the council decides the tape must be returned to the Two Towers video store "from whence it came", and forms the "Fellowship of The Lord of the Rings", which consists of Stan, Kyle, Cartman (with Kenny), Craig, Jimmy, and an unnamed kindergartener (possibly Filmore).
The boys go to the store and, after avoiding a run-in with the 6th graders (in which their party loses Jimmy, Craig, and the kindergartener), join Butters. He offers to guide them to the store in a thinly veiled attempt to get the tape back. Soon all the boys wind up at the Two Towers, and with the 6th graders in hot pursuit they desperately try to return the tape to the drop box. When Butters refuses to let go of it, Kyle throws him and the tape into the drop box. Angered at losing their movie, the 6th graders, now acting as Ringwraiths, threaten to beat the boys up, but flee when the parents arrive. The parents then go into a long discussion with the astonished boys about sex, touching on such subjects as 69ing and double penetration. The boys (who never actually watched the movie that their parents are so graphically describing) are speechless. The episode ends with a view of Butters, clutching his "precious" among a pile of other returned tapes in the drop box.