Sheepish,
Sorry it took me while to get to respond. I am visiting my mother for a few days and can't get online till at night.
Anyway, enough about me. What a fantastic story! I too want to know what happens next. The only small error I found the use of the word drug when it should be dragged. Apart from that, I could see no other errors, your commas were all where they should be and your paragraphs were of a good length.
I think you are ready for level three--- so pick up that sheep and I'll let Rabbit know.
Good luck.
Aussiegirl