Head back to the Conde Petie Mountain Path and once again follow the trail to the right. When you are back in Madain Sari the moogles will take Eiko to back to her house. Move through Madain Sari and enter her house. Go out onto the patio, head down the stairs and inside the cabin that all of the moogles are surrounding. When Eiko leaves the cabin open the chests in the room, you should receive a Survival Vest and a Phoenix Down.
Once you are done leave this area and head towards the Eidolon Wall. The moogle on the outside can heal your party for you, then select the option to Peak inside. Lani the bounty hunter has a hold of Eiko, a moogle open the two treasure chests (you probably noticed them during your last visit to Madain Sari) and give you the Exploda and Elixir that were inside. Talk to the moogle and ask him where Mog is. She is to afraid to go inside, talk to the moogle again and select the 'Save Her' option.
Zidane gives in and is about to hand over the pendant to Lani when a mysterious man interrupts. Lani will run off and Zidane will be forced to fight the red- headed man alone
This battle isn't too hard if you just keep Zidane's health up. Simply attack him when he is in the center, if he isn't you should use that time to heal by using a Hi-Potion. Attack him when he moves to the middle, if you want to steal with him you can, but he isn't carrying very good items. If Zidane goes into Trance during the battle it is very easy, just use Solution 9 twice and the enemy's HP will be depleted.
After the battle, the red-headed man is stunned. He hands over the jewel and Zidane passes it back to Eiko. He runs away soon after, head back to Eiko's house and talk to Momatose who will allow you to rest. Go back out onto Eiko's porch and head back inside the little cabin. Eiko will choose to leave Madain Sari and she will join Zidane and his friends. You receive the Memory Earrings, when you are ready head back up the stairs and into Eiko's house. Head outside and walk by the side of the house until the '!' appears, Zidane will be able to hear Dagger singing below.
A string of scenes will take place, Dagger will try to remember her past. The moogles will bid Eiko farewell when the mysterious red-headed man appears. For some reason Zidane trusts him and asks him to join his party, his name is Amarant. You will have to choose who will go with you now, since you can only have four characters in combat at once. I chose to keep my party the same and bring Eiko, Dagger and Vivi, but you can exchange Amarant for another character if you wish.