Styx was doing the chivalrous thing here and watching over Garanos as she lay there (he's essentially a doctor, after all) though Garanos didn't notice him there until a few beats after she awoke. Garanos is suffering some amnesia about all that happened last night, and so, doesn't understand what she's doing in a relative stranger's home wearing clothes that aren't hers.

More on this particular scene on the next page, but for now I'll mention the dream sequence. In the very first written draft, Garanos defeated the Harbinger, then was visited by an apparition of Ethreden, which thereby confirmed that he was dead. In a later revision, I left the question of Ethre's survival open, but instead had Garanos come back from all the emotional trauma and realize that to chase after such an unlikely ideal was completely irrational. If she has the strength to overcome a force like the Harbinger, she can surely cope with the death of her fiance.

That's where the dream comes in. It gave her some internal dialogue about the whole situation, and she'll gradually come to accept the very high odds that Ethreden is no longer alive during the time between the end of Volume I and the beginning of Volume II.