We get some old-fashioned flashbacks (in fact, this episode's practically one big flashback) since we're getting Richard's story tonight -- and Richard's been the same age since 1867. Back in 1867, Richard's wife was very sick. He went to see an a-hole doctor, and when Dr. A. Hole wouldn't help him, he struggled with him and accidentally killed him. By the time he made it home, his wife was dead, and he was arrested.
Richard is set to be hanged, but is instead sold as a slave and put on the Black Rock (property of Capt. Hanso). The ship wrecks on the Island and Smokey attacks, killing everyone but Richard. Richard can't get loose from his chains, until eventually The Man in Black (does he have a name? The Original Smoke Monster?) comes to him. Richard had a vision that his dead wife was alive and on the Island, and says he'll do anything for Original Smokey if he helps him save her.
O.S. sends Richard to kill "the devil" in the statue, who has his wife. "The devil" is of course Jacob, who fends off Richard and then has a lovely conversation with him. Jacob brought the Black Rock to the Island because the Island contains an evil that must be kept on the Island. Jacob hires Richard on as his liaison to those brought to the Island, and in exchange Richard will live forever.
We see present-day Richard at the beginning and end of the episode, and he has no idea what to do with himself since everything Jacob ever said was a lie. He's gone a bit crazy, poor thing. He heads out into the jungle and announces to the air that he's changed his mind. Hurley comes by and tells Richard he's spoken with Richard's dead wife. She's standing right next to him. They do the whole Ghost thing and she tells him not to feel guilty for her death, that he's suffered enough. Her final message for Richard: Stop The Man in Black (Locke) from leaving the Island, or else you all go to hell.