Lhye levitates up to peer over the curtain walls only to be approached by two apparent gargoyles who hop up onto the crenellations. He has a conversation with them, paused in his levitation by their "halt" so that he can't yet see above the walls. They respond to his questions only with: "Who goes there?", "Halt!", "No", and finally "Intruders!" They could also say "You may pass" but as they didn't recognise them and they didn't say the correct command words the two constructs that appeared to be gargoyles never said it to him.
Proteus tried to distract them by calling up but he only managed to distract one. Lhye tried to make his way past them which triggered them to raise the hue and cry "Intruders!" while flapping their leather-strapped wings against their backs in a drum-like noise. Lunjun cast web over them and Lhye cast Obscuring Mist when he spotted the archers reach their slits - their appeared to be no door that led out onto the curtain wall from the guard towers.
The drawbridge began its descent and so he returned to the ground but not before Lenny leapt up onto the edge of the drawbridge and, spying a knight in ashen plate armor with glowing ember-like redness around the gaps riding forward on a horse she charged forward and attached him. The horse had a flaming red mane / tail and black body (the mane appeared to be on fire at times so Lhye supposed it was a Nightmare). The knight said little except to command them to leave.
The horse stamped its hooves and a blast of fire surrounded it. Later it reared and lashed at her with its hooves. The knight merely cast Charm upon each one in turn while they tried to whittle him down (massive Damage Reduction and a high Armor Class and Spell Resistance). He had, however, belt at his hip an ice blue Claymore which he wielded effectively when finally forced to dismount by multiple attacks on his mount that left the horse dying (but not dead, it stabilised).
By this point it had charmed Archer who stopped shooting at him, imagining that this place with its shops and peasant smitheries set into the curtain walls on the inside and its market yard which they were currently in and its hedge maze (with wrought iron locked gate) that stood between them and the castle might mean that they had stormed a normal castle rather than an evil one. He called out to his friends to stop in vain, stopping shooting himself, and then climbed up the gate to peer beyond where he saw a 16-year-old girl and a 14-year-old boy dressed in the castle's colours (red and black) and it's tabard as they cowered partially hidden behind a hedge row. They had rows of vials belted to them. Archer tried to talk to them but they merely begged him to stop killing the knight (which he, personally, had done but the others hadn't). He heard a dog bark and then a dog whose fur had a fiery sheen to it barked, someone begged it to hold still, but it broke loose and he saw it trail its lead as it ran up to the gate and jumped up at him (of course, being a dog, it couldn't jump high enough to get him).
The knight had also charmed Lenny who decided that she still wanted to fight (not strictly what is allowed by the spell but as she is Chaotic Evil I let it pass this time) to prove herself but not to kill him. She considered a change in her line of duties as she could always choose to work for this impressive man.
Finally the knight charmed Lunjun whose spell shots had been striking him quite well and whose first attack was a Ray of Exhaustion that had deflected off the man (natural 1, critical failure) and struck his friend, Lenny (who luckily didn't see it as she was shot in the back). He decided that this was all a bit much and so he turned and started walking off and out of the castle.
In the end, it was a battle-furious Lenny, the bard Proteus, and the witch, Lhye, who whittled him down to almost dead though not before the man drew his Claymore and struck Lhye with a blow that dealt only subdual (which shocked Lhye, why would an evil man use a Merciful blade?). Once he got his chance to act once more, the knight vanished - likely teleporting away. Somewhere within the castle, a gong rang out.
Lhye finally paid some attention to the horse and made a Knowledge Planes roll as Lenny and Proteus discussed if the horse was worth anything. Lhye assured them it was, as it was likely to be a Nightmare, but on second thoughts upon seeing it up close and how it bled and struggled to breathe, he realised it was no planar creature. They rolled Knowledge Nature and determined that it was, in fact, the equivalent of a unicorn of the Storval Plateau - a beast descended from a fire elemental and a gold dragon in it's distant past.
Proteus responds by tipping a Cure Light Wounds potion in its mouth.
Now they are all confused.