Riker is away on "personal leave". Speculation begins... now.
Data calls Wesley, Geordi and Troi to his lab to show off the android he's been building since the cybernetics conference he's been to. They're impressed by Lal, who refers to Data as "father", although Lal looks like a piece of chewing gum someone spat out.
Picard is impressed but pissed off that Data didn't mention this to him earlier. Data rightly points out no one else consults with him when they make babies. Also, he's scanned all available parenting texts. Awwww, that's cute. Picard seems to be stressed.
Data and Troi take the walking cough drop on a tour of the ship, and Data informs hir that it must choose and external appearance. Lal seems keen on looking like Troi, but they take hir to the holodeck to try out different forms. Eventually Lal decides on a human female form.
Data takes Lal back to his quarters and sets about instructing her in recognition of objects and eating and so on. It's mindbendingly cute. Wesley suggests sending her to school, then Crusher tells him he should go get a haircut. *stares* he has very little there to cut. Lal starts asking awkward questions on the nature of reality at which point Data panics and turns her off.
Admiral Haftel, meanwhile, has heard of the experiment, and wants to transfer Lal to a research station. Picard tells him to go piss up a rope.
Lal does not do well in school - she does not understand interaction with the other children. Data goes to get parenting advice from Crusher. Data says he can give Lal attention, but is incapable of love - Crusher doesn't buy this.
Haftel tells Picard he's coming aboard to check out Lal's development, and may take her away with him. Picard reveals in his captain's log that Lal is Hindi for "beloved".
Data takes Lal to see human behavior in Ten Forward. Guinen and Data are excited over the fact that Lal can use contractions. Picard lets Data know that Haftel is on his way. Also, Riker's back from his "personal leave". Data wonders how much experience Haftel has when he started having children.
Lal and Guinen observe a couple making out in Ten Forward. Get a room, people! Then Riker arrives in Ten Forward, and Lal seizes him for a snog. Data arrives and asks what his intentions are towards his daughter, at which point Riker flees in terror.
Later on, Lal says she's learned that holding hands is a sign of affection, and holds Data's hand. If they start making out, I'm leaving.
Haftel arrives and immediately has an argument with Picard over whether to take Lal away or not. Haftel is what is technically termed a pillock. He consults with Data on Lal's development, and they go to Ten Forward to watch her working as a waitress. Haftel is unimpressed. He interviews Lal with Picard sitting in. Afterwards, Lal staggers into Troi's quarters and says she's scared that Haftel wants to take her away.
Haftel has decided that he's going to take Lal away, though Picard and Data argue against it. Picard refuses to allow the transfer and says he's going to go to Starfleet over this. They're interrupted by Troi telling them something's wrong with Lal. She's undergoing a cascading malfunction, and despite Haftel's help, Data is unable to repair the damage. Lal tells Data she loves him, and then dies. Data reports to the bridge and says he's incorporated some of her memories into his own neural net. The end.
Man, they're on a roll. Another great episode!