Marlowe describes the inside of Geiger's house: it is ornate and decorated with silks and cushions, with oriental décor and furniture. Odd smells abound, including the scent of ether in the air. Marlowe sees that Carmen Sternwood is in the room, sitting naked on a chair, with "mad eyes." She seems unaffected by the shooting and unaware of her surroundings. She is clearly drugged, on some combination that includes ether. At Carmen's feet, beyond the fringes of the Chinese rug, lies the lifeless body of Geiger, who has been shot.
Marlowe begins to piece together the events of the night when he notices a hidden camera pointing at Carmen. The camera is hidden in a totem pole with a camera flash bulb attached to it. The bright light had come from the flash, and the yell had come from Carmen's surprise when the flash went off. Marlowe dresses Carmen, who, in her state, is giggling and incapable of dressing herself. Then, Marlowe walks over to the totem pole and realizes that there is no plateholder in the camera—it is not in Geiger's hand either. Indeed, the film plate is missing completely. Marlowe searches the house for the plate and fails. He does find something else, however: a blue leather book filled with writing in some kind of code. Marlowe takes this book with him, places Carmen in her car, and drives her home.
When they arrive at the Sternwood mansion, Marlowe asks for Mrs. Regan, but learns she is not in. The General is asleep, much to Marlowe's relief. Norris, the butler, takes Carmen and offers to call the detective a cab. Marlowe, however, thinking ahead, refuses the cab so as to make sure there are no traces left behind from his presence at the Sternwoods' that night. He decides, instead, to walk the "rain-swept" streets back to Geiger's house. When Marlowe reaches the house and enters it once again, he notices two things: there are two strips of silk missing from the wall, and Geiger's body is missing.
Marlowe searches the house and cannot find the body. He finds a locked bedroom, which he uses Geiger's keys to open. The room is different from the rest of the house—more "masculine," according to Marlowe. He comes to the realization that whoever has moved the body wants it to look like Geiger is missing, not murdered. Marlowe also believes that it is not the murderer who has hidden the body, but someone else. The murderer left quickly, fearing that Carmen, a witness, may have seen him. Marlowe thinks to himself and comes to the conclusion that it is all right by him for the body to be hidden, as it will give him time to surmise whether or not he can keep Carmen Sternwood off the record in terms of the occurrences of the previous night.
After his thinking, Marlowe sits down to try and crack the code from the notebook he has taken with him. All he can figure out is that the book is an encoded list, probably of customers. There are many entries in the list, at least four hundred. That night, Marlowe returns home full of drink, and falls into a sleep brimming with dreams from the night that has passed.
The next morning is sunny, unlike any of the other days thus far. Marlowe wakes up thirsty and hung over. He receives a phone call from Bernie Ohls, the D.A.'s chief investigator and the man who told him about General Sternwood. Ohls says that a Buick has been found in the Pacific Ocean with a body inside, apparently after driving off the Lido fishing pier.
Marlowe's first impulse is to ask whether the dead body is that of Rusty Regan. Ohls assures Marlowe that it is not, but that he can come down to the pier with him to see for himself. Ohls seems curious as to why Marlowe is searching for Regan, but Marlowe assures him that he is not.
When the two reach Lido, the police claim that evidence suggests the accident must have occurred at around 10:00 the night before, but definitely no earlier than 9:30. Whether the death is suicide or murder is ambiguous. The throttle of the car is set halfway down and the body appears to have been hit on the side of the head, which makes it look like murder. However, the car does not appear to have swerved, and had instead plowed a straight path down the pier to the ocean, which makes it appear like a suicide.
When the body is brought up, Marlowe recognizes it as the Sternwoods' chauffeur, whom he had seen during his first visit to the mansion. The young man's name is Owen Taylor. Ohls informs Marlowe of Taylor's record: Taylor had attempted to take Carmen Sternwood away with him to Yuma, Arizona, but Vivian Sternwood had them tracked down and had Taylor sent to jail under the Mann Act. Ohls also tells Marlowe that Taylor was apparently in love with Carmen and wanted to marry her. Vivian seemed to have something against him, but when he was released from jail the family rehired him.
Ohls says he is going to tell the Sternwood family of Taylor's death. Marlowe asks him to leave the "old man" out of it, which Ohls finds odd. Ohl's questions once again bring up Marlowe's suspicious interest in Regan. At the end of their conversation, Marlowe heads out for Geiger's store for another round of investigation.
These chapters again are laden with descriptive details. In Chapter 7, Geiger's room is described as lavish and ornamented. It is juxtaposed against the description of the one bare and "masculine" room in the house, which Marlowe finds later during his second visit. It is here that we begin to see how Chandler and Marlowe see Geiger's feminine and ornate surroundings. We later find out that Geiger is a homosexual or possible bisexual; Chandler's description of Geiger's house foreshadows this. The portrayal of the homosexual is not an altogether positive one, especially when juxtaposed against the likeable, heterosexual Marlowe. However, there seems to be a great deal of male fraternity throughout the novel that is portrayed in a positive light. The close friendship between Regan and the General seems a positive one, although we may bring it into question as a homosexual one. Also, the relationship between Marlowe and the General seems, somehow, to mirror that earlier relationship between Regan and the General. This ambiguous tone of possible homosexuality continues throughout portions of The Big Sleep.
These chapters also continue the exploration of several elements introduced earlier in the novel. We see the first instance in which the weather is sunny, which may mean that elements of Marlowe's puzzle are somehow falling together. When Carmen's eyes are described as "wild," we immediately know to pay closer attention to her as a character, due to the previous references to the eyes of the portrait, the eyes of the general, and the eyes of Mrs. Regan. Furthermore, we are again forced to look at Marlowe as a modern knight. Here, we see the reenactment of the event in the stained glass from the first chapter: Marlowe rescues a naked Carmen from her chair before the camera and takes her home. It is now Marlowe's duty to solve the puzzle he has before him in order to make himself a more efficient knight than the one in the stained glass. Nevertheless, Marlowe has already proven himself more efficient in taking the initiative of dressing Carmen and seeing that she gets home safely. He continues to act in this chivalrous vein when he is thankful for the possibility of leaving her out of the scenario all together. Marlowe is not only a gentleman and a good detective, but he is also a good employee who wants to protect the reputation of his clients. Marlowe does not want to cause General Sternwood the heartache of seeing his daughter drugged and indisposed, and he does not want to taint the Sternwood name any further by allowing Carmen to be placed at the scene of the crime. Later, Marlowe asks chief investigator Ohls to please keep the General uninformed about what occurred with Owen Taylor, again, in an effort to protect the General from his own family.
However, questions arise out of the above "knightly" behavior. Is Marlowe truly being a good detective by not providing the police with all the information he possesses? Is he being a good citizen? Does a good employee really not tell the whole truth to his employer? Perhaps the answer to these questions lies in an understanding of what it means not only to be a knight but a modern knight, existing within the moral and ethical confines of 1930s Los Angeles.