The Island of Illusions!

On the way to Mahora Island, the gang's boat passes through fog and they believe they see a familiar shape in it. After avoiding a giant Heatmor when Pikachu's attacks do not work against it, Axew gets poisoned by a Foongus's Mushroom Spore attack, forcing the gang to take him to an old Pokémon Center which they soon discover is operating illegally.