I missed the pre-credits teaser, sadly.
So, Picard is quite happy with his Dixon Hill program and exposits at length about it. Then calls a meeting of the senior staff to tell them all about it. Picard, you big kid!
Picard: When that woman kissed me it was so ... real!
Riker: *perks up*
Then they start off on some discussion about a coming vital diplomatic mission with the Jaradans, which is their B plot, and Data dn Geordi have a discussion about Dixon Hill which leads to another Sherlock Holmes reference.
Picard, Data and the red-shirt named Whalen go back into the Dixon Hill program. Hey, the holodeck came off the side of a corridor before - now it's at the end of one! Dick Miller happens, then Data is confused by slang, despite having read the entire catalogue of Dixon Hill books, and Picard is arrested by the fuzz.
The Jaradans do a long-range scan on the Enterprise, which doesn't in any way cause the holodeck to malfunction. Noooooo.... The Jarada call them up and demand to talk to Picard.
Crusher jumps onto the holodeck, despite the fact there's obviously something wrong with it. Duh. She seems disturbingly keen on being interrogated.
Geordi reports the holodeck is malfunctioning. Oh noes! That could never happen! Riker reluctantly takes Wesley with him down to take a look. Just cut the power! Wesley sets about fixing the holodeck, because an acting-ensign is obviously most qualified.
Picard is enjoying being interrogated. Possibly a little too much. Eventually they let him go, and he goes and perves at Crusher. They return to Dixon's office where a Peter Lorre impersonator is waiting for them. He shoots Whalen, at which point they realise the holodeck safeties are off and they can't leave the holodeck.
Peter Lorre returns with Cyrus Redblock who's apparently also hostile and wants some object that Dixon got for him. A tense standoff ensues. It ends when Wesley fixes the holodeck. The door opens (and it's a cross-corridor on the other side again). Cyrus and Peter Lorre step through and promptly disappear because they're holograms. After the others leave, Picard shares a tender moment with his policeman friend.
Picard returns to the Enterprise bridge and resolves the B plot by making noises like a hippo being strangled. Teh end