This was one of the dreams in which I'm sometimes observing the action, and sometimes a direct participant.
I dreamed I was at a party of some kind, with lots of people just sitting around in a living room or a patio. At first, I was sitting there, enjoying myself, but then I started to realize that a person sitting across from me was actually evil. This person seemed to shift from a man to a woman, so I couldn't say for sure which it was. But she/he was evil.
As I came to realize this, the devil just kept staring at me, and I knew that she/he knew that I'd figured it out. Somehow I feared that it could sort of read my mind.
Then I switched to observing. A younger kid went to the bathroom and figured out that the devil was at the party. He poked his head out of the bathroom and signaled to his mom to come to help him. But he really wanted to tell her about the evil person. She came to the bathroom and decided to give him a bath. But when she turned to get a towel, the boy seized up and just died instantly. She fished him out of the tub, where he'd sunk. She was scared and freaking out, but she knew she had to keep a low profile.
Then I was back in the living room. I knew what had happened in the bathroom, and then it suddenly became clear to me that the dead kid was really my sister. I started trying to signal to a friend that this evil person was in the room. I still suspected, however, that the evil person could read my mind. She/he just kept sitting across from me, wearing a small, ironic smile that was just for me. She/he knew that I was going to try to spread the word, but she/he also knew that I was afraid that more deaths would take place.