The first to befriend him is Yu Lung, who then persuades Monkey to go along with his plan to persuade the local villagers that he's not evil. Monkey makes himself equally giant (his rarely-seen "Cosmic Manifestation" - probably it's rarely seen because it's not the best effect in the world, even by Monkey's standards) and pretends to be evil himself.
When Monkey threatens to eat the villagers, who should come to the rescue but the dog-spirit. There then follows a titanic battle, and while the growing and shrinking effects are poor, I will give some credit to the tiny-villagers-cowering-away-from-the-two-huge-monsters-fighting effects.
When the dog-spirit drives off the evil Monkey-demon, he is accepted as a friend by the locals.
To summarise: this episode is barking mad.
I'm sorry. I'm so sorry. But I'm 36 episodes in, please allow me some easy ones.