- Indiana and Brody arrive in Venice and wonder aloud how they'll recognize Dr. Schneider when they see him.
- Turns out Dr. Schneider recognizes them. Also? She's a woman. Her name's Elsa.
- As they walk along the canals, Elsa brings Indiana up to speed on the Grail project. The last time she saw his dad, they were in the library. He was getting close to finding the knight's tomb and was as giddy as a schoolboy. Indiana says can't really picture his dad being giddy, and he swipes a flower off a cart.
- Focus, man. Your dad's missing.
- Indiana gives Elsa the flower, and they start bantering back and forth, romantic comedy style, until Brody basically says what we just said: a man has vanished, and they need to get their act together.
- Elsa says that Indiana's dad sent her to the map section of the library to find a map, and when she came back, all that was left was a scrap of paper with some Roman numerals on it. She gives it to Indiana, just as they arrive at the library.
- Brody and Indiana both comment on how the library looks more like a church than a library. Elsa says that's because it used to be a church. Also, it's closing time.
- While Elsa goes off to arrange for them to stay after closing, Indiana examines a large stained glass window of a knight that looks just like what we, the audience, saw his dad copying into his Grail journal back when Young Indiana was riding circus trains and thwarting robbers.
- As it happens, Indiana remembers seeing the window in his dad's diary, too. He and Brody spot the Roman numerals in the window. There's a 3, a 7, and a 10.
- When Elsa returns, Indiana tells her and Brody that his old man wasn't looking for a book about the knight's tomb, he was looking for the tomb itself.
- Then Indiana points out that the 3 and the 7—er, we mean the III and the VII—are carved into two of the library's big pillars. But where's the 10? We mean where's the X? Indiana, Brody, and Elsa search the immediate area.
- Indiana's on to something and races up a staircase. From up there, he can see that there's a giant X on the floor. "X marks the spot," he says, and it's a good thing his students can't see him now.
- Indiana starts trying to bust through the X on the floor with a brass pole. Conveniently, every time he slams the pole onto the tile floor, the crash coincides with the little old librarian at the front desk stamping books, who's wowed by the awesome power of his stamp.
- Indiana breaks through, and he and Elsa go down into the hole to see what's under the floor. They promptly start nerding out over archaeological stuff like pagan symbols drawn on the wall.
- Meanwhile, Brody, who's loyally guarding the hole in the floor, gets knocked out by two mysterious thugs wearing fezzes, who drag him into the stacks.
- Back below the library, Indiana and Elsa pass more drawings (including one of the Ark of the Covenant—as in the ark that put the Ark in Raiders of the Lost Ark) and some gnarly skeletons that look like they haven't seen a Pledge wipe in ages.
- Indiana spots a suspect-looking spot in the wall and busts through it, offensive lineman style. Elsa's impressed.
- Indiana falls through the wall into some bubbling, petroleum-filled water. And, oh, look: more dusty skeletons.
- Indiana uses the petroleum to make a torch, and he leads Elsa into a room teeming with rats. Imagine if your living room carpet were made out of hundreds of rats, and that's what we're talking about here. Elsa's majorly grossed out. Indiana throws her over his shoulder like a caveman and carries her on to the next room.
- Meanwhile, we see Fez 1 and Fez 2 peer through the hole in the wall that Indiana made just a couple of minutes ago.
- Indiana and Elsa make their way along the rat-covered banks of a canal and end up in a room filled with waist-high water and several tombs. Elsa deems one the winner, and they open it up.
- Inside, Indiana and Elsa find the remains of a what sure looks like a knight, since he's clutching a huge sword and a shield with an inscription on it that looks just like the tablet Donovan showed Indiana.
- "This is it!" Indiana says. "We found it." Yup, the shield is the second marker.
- Elsa says it would be so nice if Indiana's dad were there, but Indiana tells her that Pops never would have made it past the rats, because he's scared to death of them.
- Back in the petroleum room, Fez 1 and Fez 2, now joined by Fez 3, strike a match and throw it in the water, setting it on fire. The fire drives the rats toward Indiana and Elsa. Indiana overturns a casket (sorry, dead guy), and he and Elsa dive underneath it in the water, taking several rats with them that just love Elsa—especially her hair. She screams her head off, and Indiana says he thinks he's found a way out.
- Cut to the exterior of the library in peaceful Venice. Dozens of Italians are dining at tables in the plaza. Then, BOOM: Indiana bursts up from the ground through a manhole cover, sopping wet. The diners are alarmed. It's enough to put them off their risotto.
- "Ah, Venice," Indiana says as he pulls Elsa above ground.
- Just then, the Fez patrol (of which there are now five, if you're keeping score at home) come dashing out of the library's front doors. Indiana grabs Elsa's hand, and they take off running.
- Indiana and Elsa run to a pier, nick a speed boat, and take off, but not before one Fez jumps in the back. The other Fezzes follow.
- While Elsa drives, Indiana and Fez fight on the back of the boat, Fez firing off shot after shot. He's a terrible shot.
- Elsa steers between two huge ships that are docking together, and they narrowly escape getting smooshed. One boat's worth of surplus Fezzes follows and isn't so lucky. They all get crushed.
- Another boatful of Fezzes follows Indiana and Elsa, firing shot after shot and missing until the boats are side by side.
- Indiana boards the Fez boat and starts tussling with Fez 1. All the while, that boat is getting pulled into the propeller of a large ship. Ruh roh.
- Seemingly unfazed by the prospect of being sliced and diced, Indiana questions Fez 1. He finds out that the Fezzes are trying to kill him because he's after the Grail, and that, no, they didn't kill his dad. Fez 1 still refuses to say where Indiana's dad actually is, though.
- At the last minute, Indiana pulls Fez 1 to safety in Elsa's boat.
- As they head back into Venice, Fez 1 says he'll tell Indiana where his dad is if he lets him go. Also, his name is Kazim.
- Indiana asks Kazim why he's trying to kill him. Didn't we already go over that?
- Kazim tells Indiana that he's just trying to keep the Grail safe—and keep its location a secret.
- Kazim also tells Indiana that his dad's being held in the Castle of Brunwald on the Austrian-German border. Then he leaves.
- Indiana returns the boat to a dockhand, who seems totally unfazed by both the bloodied dude who just got off of it and the abundance of bullet holes riddling it.