In Chapter 4, just after you do the first chess puzzle, you will get chased into a hole by the giant unbeatable card monster. When you first get down there, go a short distance ahead, and look at the right wall to find a heart stone. Shrink down to learn that it is a fake rock. Run into the keyhole tunnel. On the other side is a floor where you can use a bomb to break it. Do so, then go down the stairs to get a memory and some extra teeth. There is also a skeleton sitting on a chair. It is Raz from Psychonauts. He can be identified by the red goggles, his shape, and the position he is in (which is the stance he uses for a mind attack). With this in mind, it looks like Raz is dead, and there will be no Psychonauts 2.