Yes, Seo has made a wish that Dawn was still alive... and it's resulted in doom for everyone. In the whole universe.
What's more, D'Hoffryn's back, and he wants to make sure that Seo knows exactly what her wish did and how much damage it caused. He does this via a huge and exhaustive gloat.
From D'Hoffryn's gloating and taunting, we soon learn that Seo's wish somehow resulted in D'Hoffryn's power returning, and the vengeance demons conquering the universe. The vengeance demons have also converted Earth into their home base, and it seems that the few remaining non-demon humans on Earth act as slaves to the Vengeance Demons.
"One wish," D'Hoffryn tells Seo, "and your planet is destroyed, your universe rewritten, all timelines have changed, and your own life is entirely at our mercy."
Seo doesn't understand how this happened.
Dawn does.
Dawn lunges for the vengeance crystal, and smashes it underfoot. But nothing happens.
"We're too powerful, now," D'Hoffryn tells Dawn, "to be affected by something as simple as that."
"Too powerful?" Seo shakes her head. "But how did my one wish allow you to do all this? It doesn't make sense!"
"Yes, it does," Dawn breathes. She steps back, shuddering. "It really, really does."
Dawn doesn't want to explain, further.
But D'Hoffryn insists. "Tell Seo the truth," D'Hoffryn demands. "Tell her what happened on Gallifrey, when you were stolen away from Earth and sent to the Victor's lair. Tell her how she changed history, by allowing you to survive."
So... Dawn tells.
This is what happened.
"I was walking with my husband, Keith," says Dawn, "when this big light thing swallowed me up. Keith died — it was horrible. And I got sucked onto this... big, red-orange planet, with lots of human-looking people speaking alien, which I couldn't understand."
Dawn tells Seo that she'd found herself in a cavern outside the capital, and had been tied up and shoved inside a very nasty-looking machine, while some guy in robes with a huge collar and enormous hat started shouting about things in alien.
When the alien guy activated the machine that Dawn had been shoved inside, then Dawn knew — this machine was gonna kill her.
"But I guess they thought all humans were pushovers," said Dawn. "Or they'd have tied me up better."
Turns out, Dawn had escaped from the machine.
And run.
"When I got outside the alien's cavern-lair thing, it became pretty obvious where I was," Dawn continued. "Orange sky. Silver leaves. Red grass. Two suns. And this big dome thingy in the distance, with a city inside it. Add the huge hats into the mix, and there was only one place it could be."
Dawn managed to sneak into the capital, using a combination of ingenuity, luck, and memories of stories Ace had told her about sneaking around Gallifrey during her Academy days.
Eventually, Dawn tracked down Jenny.
"But by the time I found her," Dawn said, "it was pretty obvious something was really wrong. The whole planet was shaking, and I could feel this crawling, horrible sensation deep down inside of me, like everything was about to fall apart."
As soon as Jenny had seen Dawn, she'd been horrified. And she'd figured out exactly what was going on. While Jenny fixed it so the translation worked for Dawn, she explained — the Chancellory Guard had raided the Victor's hideout, earlier. But whatever they'd set out to prevent, they'd failed. The machinery the Victor was using was massively unstable.
All of Gallifrey was at risk.
"Presumably, they were going to use you to make sure they actually ascended, at the right moment," Jenny had said, dragging Dawn off with her. "But without you around, it's unstable. Our universe, and all the others, are at risk. And when the destruction really begins... the Time Lords will be the first to go."
Jenny had had a plan, of course. To stop the devastation.
They had needed to return to the Victor's hideout, to modify some of the equipment. They'd been accompanied by Weryn, an associate of Jenny's, who was on the High Council. He'd helped them to get out of the capital and had led them both to the right spot.
They had met resistance from the Victor and his followers along the way, of course. The Victor had tried to grab Dawn back and use her for himself, but Jenny and Dawn had managed to outsmart and outmaneuver them.
The Victor had died, in a futile attempt to get Dawn back.
Jenny had gone back to his lair and found his machinery. She'd modified his machinery the way she'd planned — but when she did, Jenny had realized that by this point, it was too late to simply plug Dawn back in. They needed her Key powers in a more concentrated form — otherwise, there was no guarantee that her activation would save the Time Lords and the multiverse.
That meant… they'd needed Dawn to be converted into a stone segment of the Key to Time.
"As it turns out, the Victor had everything he needed, nearby, to convert me into a segment," Dawn explains to Seo. "But... there was some fear that, if I was turned into a segment, I couldn't be turned back. I'd be a piece of stone forever, and the real me... would die."
Dawn, of course, had been hesitant to allow them to convert her, after hearing this. She realized that this must be it — what she'd heard about in the Ten Seos. This was the moment, Dawn knew, that she was going to die, and Seo and Jenny would blame themselves for it, forever.
But she couldn't die! Not now!
Without Keith, her kids had nobody. Dawn knew she couldn't let them grow up alone! She needed to be there for them! She needed to take care of them!
Jenny had tried to reassure Dawn that it'd be okay — Dawn wouldn't die, if she was converted into a stone segment. "Romana said there was a way to turn stone segments back into people," Jenny said. "She said that Dad had done it, before!"
That was when it struck Dawn.
This was the answer.
"I remember... in the future I saw, before, the Doctor had died at Trenzalore!" Dawn explains to Seo. "But that future had been changed. The Doctor got more regenerations. He's still alive! So I thought... this is it! My way out. If the Doctor can turn me back, then this time... I'll survive it!"
She'd therefore decided to submit to the conversion, willingly.
But before she'd had the chance to actually do so...
Dawn had found herself back here. On Earth. With Seo and Vengeance Demons.
Seo had made her wish, and Dawn had been whisked away from Gallifrey at exactly the wrong time, as a result. Dawn had been saved.
But Gallifrey had not.
That's the end of Dawn's story.
"You were dead," Seo says to Dawn — as if to justify herself. "I just wanted... to bring you back."
"Maybe I wasn't really dead!" Dawn replies. "Just a stone segment! But the Vengeance Demons made you think I was dead, so you'd make your wish."
"You were dead!" Seo insists.
Dawn shakes her head. "They used you, Seo. To destroy the Time Lords."
The Vengeance Demons, around them, sneer.
"That's how they got all this power," Dawn finishes. "That's why breaking that vengeance crystal did nothing. It's why they can rule the universe!" She steps forwards. "They took me out of harm's way, just in time to kill the Time Lords. And the vengeance demons used that to steal Gallifrey's secrets for themselves."
D'Hoffryn agrees. "Dawn gave her life to stop this happening," he says. "Your wish undid that sacrifice. And we took full advantage."
Now Seo's starting to realize what her wish really meant.
And feels horrible.
Dawn starts berating Seo. "These are vengeance demons!" Dawn shouts. "They're evil, Seo! What did you expect, when you made a wish? Did you really think you could outsmart them?!"
Seo turns to D'Hoffryn. She demands to know what happened after they rescued Dawn. What happened on Gallifrey, when Dawn got whisked back to Earth, due to Seo's wish?
"Jenny managed to synchronize the Victor's machinery to the Eye of Harmony," D'Hoffryn says. "It stopped the collapse of the universe — and all others. But without Dawn as a segment, the power demands were too great. The Eye of Harmony went into overload, and all the Time Lords in that universe were killed, in an instant."
"But the planet, itself, wasn't destroyed," another Vengeance Demon puts in. "And neither was its technology."
"And my wish gave you vengeance demons access to all of it," Seo realizes.
Yes, she guessed right. As it happens, because of her wish, the Vengeance Demons were able to arrive on Gallifrey, even though it was in another universe, and learn all the Time Lords' secrets for themselves. They gained full mastery over time and space, then returned home and used their new powers to rewrite history.
To their own benefit.
D'Hoffryn was restored to what he once was, and taught the full secrets of Gallifrey. Earth was turned into the vengeance demons' home base. Millions of humans across history were turned into Vengeance Demons, then sent out among the stars, to control the destiny of the universe.
And other universes.
The power of the Time Lords combined with the power of the vengeance demons... was a terrifying thing, indeed.
"Of course, while we were still conquering this universe, we found something else," says D'Hoffryn. "Something Gallifreyan — that hadn't been on Gallifrey, when it had fallen. Something… terribly useful. That we managed to control."
D'Hoffryn gestures into the distance, and the crowd of vengeance demons part, around them.
A figure steps through the crowd.
It's that Time Lord superweapon, which Seo had rescued. The Moment.
"She's been very useful to us," D'Hoffryn explains, "once we bent her to our will."
Seo grows very wary, at this.
Doesn't know what's going on, but knows that the Moment in the hands of the Vengeance Demons could be disastrous.
"Why's she here?" Seo demands.
"To show you the truth, of course," D'Hoffryn replies. "See, some of the Time Lords had a plan to stop the Victor, which would have left Dawn alive. But for that plan to work… you had to show up on Gallifrey. They called you, when the planet was shaking and Dawn was preparing to die. But you didn't come."
"Me?" says Seo.
"Yes — you," D'Hoffryn says. "The truth is... this is all your fault. You were the one to create a situation where you had to choose between the death of your aunt, and the destruction of everything you hold dear. You did this."
He turns to the Moment.
"Tell her," D'Hoffryn commands. "Show her."
The Moment, however, doesn't show anything. She tells Seo that, "He is lying about why. But it is your fault."
D'Hoffryn, suddenly nervous, bundles the Moment away.
Seo tries to ask questions, but gets no answers.
"You tried to make me powerless," D'Hoffryn tells Seo, instead. "You tried to trick me and use me for your own ends! But now, I have the ability to avenge myself on you."
"By exploiting my loyalty to my family," Seo says, "so you could destroy my home planet and my universe?" She stares him straight in the eye. "You might think you've won, D'Hoffryn. But I can stop this. I can set everything right!"
"You? A mere human?" says D'Hoffryn.
"I'm no mere human," Seo replies.
D'Hoffryn gives an evil smile. Raises his hands, and says the words of vengeance that give him power…
"I wish," D'Hoffryn commands, "that Seosyrae was fully human."