In #29, Bobby and Amara are kidnapped by the Gladiators, a kind of evil. Sam and Illyana team up with Lila Cheney and Dazzler to rescue them. In #30 they are joined by Rachel and Kitty. In #31 it is revealed who the mastermind behind all this is: Xi'an - it looks like her uncle took her up on that promise. She flees.
In #4, the New Mutants proper (Dani, now going by "Mirage"; Sam, Bobby, Amara, Rahne, Illyana and Doug and Warlock - minus Rachel and Kitty) track Karma down in Madripoor (making its first appearance here). If Madripoor is Mos Eisley, it has to be said that Karma now bears a striking resemblance to Jabba the Hutt. The attack does not go well, and Karma takes slaves. Dani and Illyana prove resistant to mind control and follow her to Cairo, while Warlock tracks down Storm and gets her to meet them there.
We discover that something evil is possessing Karma - although it is not yet named as the Shadow King, it is the same thing possessing Amahl Farouk that Xavier found in Cairo in the flashback for #117 (when he met Storm for the first time). Illyana is eventually able to break the psychic control by sending everyone to Limbo, while Warlock provides a distraction by pretending to be her. A liberated Karma herself banishes the force.
I find this a bit of a let-down, as it seems rather a mundane possession story. I was hoping for emotional pay-off of the deal between her and her uncle, but that was just teased and then seemingly forgotten about. Maybe to be revisited at a later date?