Patapon: Possessed Dreams takes place after Patapon: Rise of Cosmos.
After the last generals were defeated, the Patapons rejoiced in their defeat. However, Sorrowflute and remained. He was furious about this, and decided to possess the Uberheroine, Zara.
When Zara was possessed, she replaced Mischevous (a.k.a Meden) in becoming the Princess of Lust. She attacked the Zigotons, and because of this, the Zigotons were furious at the Patapons. So the Patapons decided to try to find a way to release her form Sorrowflute's control.
After some research, they discovered that the only way to take out Sorrowflute is to go into Zara's mind, and go to the memory where Zara was possessed, and defeat Sorrowflute.
Snow Plain of Living Snowmen
Arena of Discord
Castle of Chaos