They drive at full speed (I guess) into the subway tunnel, and Michael jumps out of the bed of the truck, which is not where he was a second ago. He chases the Mystery Lady through the crowded subway, up and down escalators, until he corners her and grabs the thumb. He demands to know who she is, says he's never been to Beirut, the whole deal. Mystery lady wonders what they've done to him, and look sad, even though she kneed him in the gut not too long ago. Suddenly! Carrie shows up, yells "FBI! Freeze!" and shoots Michael. Even Zoe is a little taken aback by this. You'd think she'd be all psyched that something life-threatening was happening. Mystery Lady casually walks onto a subway with other nonplussed commuters, who clearly weren't told what was happening in this scene, and the shattered thumb jar is lying on the floor.
Next caption: "Somewhere over the United States". Oh, and there's an airplane. They're not just hovering out there. Carrie hangs up a phone and Michael, on the floor and clutching his stomach, wants to know what's going on. Carrie smirks and turns on a convenient television, which is tuned to a local news channel. Local to Washington D.C., I mean, not local to "Somewhere Over the United States". She's set up a cover story that Mike Traceur was a disgruntled vet who's been shot and killed by the FBI. So now everyone thinks he's dead! She tosses him an extremely confidential (A-24, and you have to admit that that sounds pretty darn confidential) folder and suggests that now that he's dead, maybe he can find out what happened. Oh, and that woman? No idea. Sorry!
After the plane lands, Michael takes KITT out for a spin. This disturbs KITT a little, who complains until Michael tells him that he's going home. But, KITT points out, his home has been gone over by the FBI, and furthermore, he's been declared dead. And a body was provided. KITT feels that Michael is not being logical. That would be the most clichéd line in the show, but Michael immediately tops it with "My past will always haunt me, KITT." You tell 'em! So instead they go back to HQ, which is a weirdly laid-out place. There's a basketball court just off the main room, for one thing.
In the basketball court, Billy, Zoe, and Carrie are having a shootaround and say some stupid things. Carrie tells Michael to come up with a new name, and there's some banter ending with Billy explaining that he watches a ton of porn. I'm sparing you here. Then the basketball court's phone rings, and Zoe answers by saying, "Research and Development, Zoe speaking." So that's what they're doing!