Talk to the lady. There is nothing to do here, so leave. Upon exiting, you'll come across three old men apparently from Team Snagem. Rui finds out you were from Team Snagem. It doesn't matter how you answer her question. One of them will eventually challenge you to battle.
Trainers with a Poké Ball by their names may be challenged for a rematch after defeating certain bosses. In a rematch they may have higher-level Pokémon, and any Shadow Pokémon previously caught will be replaced.
Koffing falls to Confusion. After that, take down Corphish with a few Bites from Umbreon and a Confusion from Espeon.
After some dialogue regarding you being from Team Snagem, Rui finds out about your Snag Machine. She says to go to the Poké Mart to see if they sell any Poké Balls. Inside the Mart, go upstairs and talk to everyone there. One of them will say there is a lack of wild Pokémon in the Orre region, so they don't sell Poké Balls. He says the guy in Outskirt Stand still sells them.
Anyways, leave the City and go to the Outskirt Stand (a.k.a. the bar) because the Poké Mart here (first floor on the left) doesn't sell any. Talk to the bartender and he'll give you five Poké Balls for free. You can now buy Poké Balls and Great Balls. Buy several Great Balls and leave the bar to return to Phenac City.
As soon as you return one of the citizens who helped you save Rui greets you. "Something terrible's happening". Something has gone wrong in the Mayor's house. Now would be a really good time to heal your Pokémon at the Pokémon Center and save. Enter the Mayor's house. Instead of Es Cade, You'll run into Miror B., a Cipher Admin (what is this? We'll find out later) with a huge afro and five peons. You'll hear your first glimpse of Miror B.'s great theme music. Miror B. precedes to leave along with the red, blue, and green grunts. The other two will challenge you. First is a rematch against Folly, who has gotten a promotion.
Folly goes down just like the other three battles you've done so far. Easy. His friend Trudly tries to do what Folly couldn't. Two matches in a row!
The first challenge. The first Shadow Pokémon you'll meet is Makuhita. This guide will cover catching every Shadow Pokémon. Duskull and Spinarak should go down easily. Use Bite on Duskull and Confusion on Spinarak. A good strategy for your first Shadow Pokémon is to weaken it with Bite, and have Espeon use Helping Hand. Weaken it into the yellow/red health bar and a Great Ball or two should do the trick. Congrats! You caught your first Pokémon. Your party now has 3 Pokémon.
Note: if you ever miss your chance at catching a Shadow Pokémon, you can catch every Shadow Pokémon at the end of the game.
Now go outside. If you want a few Super Potions they are just below the green grunt. Now you're faced with a choice. The three exits to the city have three different Trainers that have three different shadow Pokémon: the Stage 1 evolutions of the Johto starters. Choose your starter. The green guard has Bayleef, the blue guard has Croconaw, and the red guard has Quilava.
Mystery Troop Verde/Rosso/Bluno
You get a chance to catch the other two starters towards the end of the game. Weaken your starter and throw a Great Ball. Be careful, you don't want to faint your Pokémon. After the battle is over, the other two thugs leave and your defeated thug runs like a baby. You can now leave the City (but with what's ahead you might want to heal+save at the Pokémon Center. Head to the Construction Lot. There's nothing here. Now on the map head to Pyrite Town. This town is full of thugs, bad Trainers, and tons of Shadow Pokémon. If you really need to, head to the Outskirt Stand and get some more Great Balls.
