Claire says goodbye to squirrel baby, Locke reassures the kids & others

At Claire's shack, she packs up a few things and silently says goodbye to squirrel baby as Kate enters. When Kate asks what that is, Claire says "It's all I had."

Then Locke addresses everyone outside of the shack and tells Cindy and the kids that the black smoke killed those who stayed at the temple. Sayid snaps out of his daze briefly because he knows Locke is the smoke. Locke tells Zach and Emma that he's going to take care of them. He then leads them away from the camp.

We then see a brief exchange between Kate and Sawyer, where we hear Sawyer's repeated sentiment that he's not "with" Locke or anyone.

Claire keeping a "squirrel baby" in cradle, explosives + Justin's alive

Jin wakes up to find himself in Claire's makeshift shack, his leg still very bloody and painful from the trap. He looks around and sees some random Dharma food, clothing and a crate of explosives from the Black Rock. He then notices a makeshift cradle and looks inside to find a hideous thing made of random animal furs, a skull and other bits. It's been dubbed "squirrel baby."

Claire comes back dragging Justin with her, who was only pretending to be dead earlier. After tying up Justin and she turns her attention to Jin saying "We'd better get that cleaned up. If there's one thing that'll kill you around here it's infection." A clever little line hinting at the infection Rousseau talked about, but referring to a literal infection.

Jin asks her if she's been by herself all this time, and she coyly says "I'm not by myself." When she steps outside, Justin tells Jin that Claire is going to kill them both.

So Claire has clearly gone off the deep end which is especially punctuated by the squirrel baby.