At this point the game will not continue until you build your garage up to level 7 (the mobile garage). Once you've done that, go to Miller Hassah to see the Red Guns in action. Go back to Padorko to talk to Takah, then go to your house to meet Sho Kaido, leader of the Red Guns.
In the first route, there isn't anything special. In the second route, head left onto the water to find a PBodC01. Then go right and destroy a gun to get CardOD03. This gives you the Nitro Overdrive.
In the third route, head left to find a CrssBeam. Then go back to the right. Destroy a tree to get a CardCPrUp, then destroy a large vehicle to get an EChasSPR.
In the first route, hug the right wall. There's a small path guarded by guns. Inside is a large vehicle that drops an EBodB02. In the second route, head left. There's an invisible enemy that drops CardOD16. This gives you the Hyper-slide Overdrive.
Hug left wall. After a long time, you will find a gun that drops CardOD24. This gives you the Invisible X Overdrive. When you get to the exit, don't go in, but continue on. Eventually you will run into another gun that drops a GorgBombX.
Now you fight someone familiar - your father! You can't hurt him thanks to his permanent barrier. After your life drops down to ¬, Sho will arrive to help out. He drops a HPResAll and takes out Jim's barrier.
After you win, you end up back in Georgetown. Jim has a heart-to-heart with you and you both decide to go get the Empire!