The dog is friendly.
From Create Your Own Story
The dog is friendly. In fact, the dog is sentient! Through a system of 'Yes and no' barks Fred quickly sets up, he learns that this dog is actually a kidnapped teenager who lived on a farm nearby. Seems the dragon didn't eat the people it kidnapped, it changed them into animals! Animals didn't chop down trees to make homes, they didn't turn cool lush fields into cornfields, they didn't make ugly villages in lovely valleys.
The teenager, whose name is Velus, insists on showing Fred where the dragon sleeps so Fred can chop it's head off.