The C.S. Nightmare is the player's first encounter with Nightmares. After Red Riding Hood and a tutorial message emphasize their immortality, the party is forced to flee the creature or suffer a very early (and potentially embarrassing, in the player's case) annihilation.
Later in Chapter 1, the Jack and co. return to the City Streets to gather magnolia leaves. In the process, they discover one of the Jail's cores and destroy it. This weakens the C.S. Nightmare and makes it possible to kill it for good, which the party does with great gusto.
The C.S. Nightmare once again is the first Nightmare encountered, though this time, it badly injures Jack and sends Alice into a berserker rage. After Otsuu and Little Mermaid are knocked into the Underground Cavern, the C.S. Nightmare will appear in the City Streets area if it is ever visited again. It can be defeated during Chapter 9.