The Battle of the Watchtower was a skirmish between Team Evil and a force of guardsmen at the last watchtowers before Azure City to keep it from being warned of the incoming hobgoblin army as part of the Azure City Campaign.
Prior to the beginning of combat, Paladin Miko Miyazaki stopped by the warchtower for shelter after returning from Dwarven lands with a message for Durkon Thundershield from the new High Priest of Thor. She was informed of the watchtower's low rations, which she resolved to inform Azure City of when she'd arrive there.
Meanwhile, Xykon, Redcloak and the Monster in the Darkness went ahead from the large hobgoblin army, killing the guardsmen outside the tower and attempting to infiltrate it posing as encyclopedia salesmen.
The subterfuge failing, they blasted the door open and entered the tower. While the watchtower commander left to warn Azure City, Miko and Redcloak engaged in battle while Xykon and the MitD watched. Right as Miko was about to finish Redcloak, Xykon intervened, trapping her in a forcecage as he stopped the remaining guard from alerting Azure City by killing him and destroying the warning beacon. Before leaving, they mocked her, leaving her in the cage with the MitD to guard her.
After Xykon and Recloak left, Miko improvised an explosive out of one of the demon roaches, a piece of cloth from her cloak and a bottle of dwarven brandy, damaging the floor enough for her steed, Windstriker, to push the cage off her. Running into the MitD, it wanted to play "Who can hit the lightest?" with her, knocking her and Windstriker out of the tower. Changing cloaks, she rode away on Windstriker towards Azure City to warn them of the incoming army.
Meanwhile, Xykon and Redcloak watcher her ride away. Xykon took her ripped cloak, taking a few strands of hair that were left in order to scry the location of Soon's Gate. However, Miko's letter for Durkon was lost in the aftermath, eaten by the MitD.