The Ulcer was a man who lived in Hollowood, and spent much of his life watching people bargain away their talents for fame and fortune. The experience made him so pessimistic and cynical towards people that he literally became an ulcer in his own stomach. The show room where he supposedly spent his years became encased in his organs, with his heart and stomach juices below the stage, and himself a large, grotesque, fetus-like creature with a massive head and a tiny, vestigial body latched to the wall inside a fluid-filled bubble. He lured people to the room, and offered fabulous prizes for performing for him if he liked their act. If he did not, he got heart burn, and dropped them into his stomach acid to be digested.
When Courage, Muriel, and Eustace drop into this room from he street above, he offers Eustace a golden truck, and Muriel a life like that of her favorite actress, Dolores Dolores. But he hates both their performances, and are dropped into the stomach acid. Courage demands he give them back, and the ulcer asks if he would be willing to perform for a prize. Not believing Courage would really perform just to get his family back, the ulcer tells him that if he succeeds in pleasing him, he, Courage, may name his prize.Courage performs a Tarzan trapeze act which the ulcer enjoys, and crashes through the floor into the stomach acid, throwing up Muriel and Eustace before they can be dissolved.
The ulcer, moved by the sincerity of Courage's generosity and selflessness, has a heart attack from the shock, which Courage saves him from. This act reminds the ulcer of the good nature of people, which then reverts him into his original self, the organs making up the room regressing back into him, leaving a man in a white suit, and a commonplace looking show room.