The Blade Drenched in Blood (血塗られし刃 Chinurareshi Yaiba) is the fourth episode of the anime Hakuouki: Reimeiroku (Demon of the Fleeting Blossom: Dawn of the Shinsengumi). It aired on July 30, 2012.
Plot

The trio could not find Souji
The episode begins with Hijikata sending Okita back to Edo and Souji storming off promising to stay and assist Kondou.
The trio returns empty-handed as they were not able to locate Souji. Hijikata is certain that he will return once he cools down, and Sano agrees that Souji is not a kid. Kondou sends everyone to finish their meals and leaves to look for Souji, which is noticed by Ryuunosuke who joins him and learns more about Souji's past.
When he was left in the care of our dojo, he was still only 9 years old. He was born into a samurai family but he lost his parents when he was still young. His big sister, Mitsu-san, raised him instead of his parents, but apparently life was hard for them, so... The child still hadn't reached the age of 10, yet he had to leave his family and start life in our dojo. Although he never outright said it, he must have been lonely. Souji stayed with us under the pretext of being a live-in student, but he was actually treated more like a servant.—Kondou, about Souji
In Kondou's memories it is also shown how Kondou brought Souji an onigiri only to see him cleaning up his food from the floor. When he inquired about what happened, Souji said that he had accidentally dropped his plate and that he was going to clean up the mess. Kondou seemed to buy it and offered Souji the onigiri but saw a lot of bruises on his arm. He got worried and started questioning Souji about their origin but the boy only lied that he had been clumsy and fallen down. Souji thanked Kondou and asked him to leave.
Shortly after that, I saw my students beating Souji under the pretext that it was "practice". I thought I had been teaching how to be a good person along with the way of the sword... I was the one at fault. I made it clear that they were never to do that again, but...
As the memory continues, Kondou is shown to be talking to Souji outside the dojo. Souji asked whether his sister had abandoned him, but Kondou was quick to deny it and explain that she had had difficulties providing food for him which was the reason she decided to send her adorable little brother away. Kondou added that nothing in the world happened without a purpose which was why there must have been a reason for Souji to be left in the care of the dojo. Souji changed the topic to tell off Kondou for scolding other students earlier and informed him that they had beaten him up even more afterwards. He told Kondou to refrain from doing that again as Souji had never asked him to interfere.
Some time later, I came back one day from practice at another dojo to find the students thrashing Souji with wooden swords again. But the master of the dojo, Shuusai-sensei, told me not to intervene. He said that if I offered him a helping hand now, it would make him begin seeking pity from others. And much to my surprise, despite his tiny body, Souji was desperately trying to read the older students' moves and defeat them!
Several days later, Shuusai-sensei suggested we hold practice in the form of a tournament.

Souji defeats his opponent

Kondou hugs Souji to stop his rage
During the tournament, Souji was hurt and his forehead started bleeding so Kondou rushed towards him to check on him, but Souji firmly claimed that it was just a scratch and begged to continue with the practice. Kondou allowed them to proceed, and Souji eventually defeated his opponent hitting him in the stomach, however, even though the competition was meant to stop after that, Souji was blinded with rage and continued to lash at the other boy. Kondou caught his sword and proclaimed his victory which was meant to be the reason for him to stop fighting. Kondou sincerely hugged Souji and praised him for doing a great job. Souji was in shock and warned that Kondou's uniform might get a stain due to the blood on his forehead but Kondou brushed that off and added, almost crying, that, despite being tiny, Souji worked very hard and did well. Souji pointed out that Kondou never called him pitiable and then he repeated Kondou's words that everything happened for a reason. He smiled and added that the reason for him to be sent to the dojo was, in fact, Kondou himself and the opportunity to become stronger.
After the memories end, Kondou and Ryuunosuke find Souji.
---

Tonouchi comes to Serizawa
Next morning, Ryuunosuke gives Serizawa a massage and Niimi makes a sarcastic remark about Ryuunosuke's inability to learn, when Tonouchi comes with an important conversation. Tonouchi wishes to know Serizawa's opinion on Kondou and the recent Rules of Conduct along with the structure of the group. He makes it very clear that his allegiance lies with Serizawa and inquires about the reasoning behind Serizawa's inaction. The conversation ends with Tonouchi's hint that he will take care of the others when the time comes. Serizawa hits Ryuunosuke's hand to stop him from massaging and orders him to bring more sake.
On their way out, Serizawa and Niimi meet Okita. Serizawa reveals that Tonouchi has expressed a wish to assassinate Kondou, and Souji laughs hysterically admitting that Serizawa is actually a nice guy deep down.

Okita kills Tonouchi
Later that day, Souji waits for Tonouchi and lures him out of the headquarters pretending to ask for advice about the situation with Hijikata. Heisuke, Sano and Saitou catch up with Ryuunosuke asking him about Souji's whereabouts and then bring him back to the headquarters to be questioned by Kondou. Souji and Tonouchi go out drinking, and Souji allegedly shares more about himself prompting Tonouchi to make comments about Kondou's low background compared to his and Souji's samurai families. On the way back Souji murders Tonouchi in cold blood. Meanwhile, Hijikata quickly realizes that Serizawa said something to Souji and rushes to search for him but hears Heisuke's scream that Souji has come back. When everyone runs out to see Souji, they learn about what he has done which he does not seem to regret as he openly speaks about being tired after killing someone.

Hijikata bursts into Serizawa's room
Instead of scolding Souji, Hijikata puts the blame on Serizawa as he bursts into his room yelling. Serizawa looks calm and starts laughing as if he expected Souji to do exactly that. Serizawa explains that Tonouchi was two-faced and deserved what came for him, and also points out that Hijikata is being illogical as he himself has written the Rules of Conduct which require seppuku (honorable suicide) if they are broken. He elaborates that since seppuku requires an attendant (the person who cuts off the head of the samurai who slices his stomach open), Okita did exactly the job he was given to do and killed the member who was not willing to follow the Rules of Conduct. Serizawa goes further and calls Hijikata and Kondou soft claiming that they are the ones who should return to Edo. Hijikata silently agrees with a bitter expression on his face and Kondou admits having a certain lack of resolve, however, he explains that he did not want Souji to soil his name by killing a comrade.
While everyone seems upset and worried, Souji promises to himself that he will help Kondou even more in the future.