He first appears sitting when the Lambert family moved to the first house in the movie. Later, lip-stick face possesses him and Dalton appears laying in his bed until the end of the movie, when Lip-stick face was stopped. Dalton then doesn't appear possessed.
Insidious: Chapter 2
Dalton begins to notice that his father Josh is acting strange but it seems that he is unaware of his experience in 'The Further'. Dalton is awoken one night to whispering through the can on string by his ear. When he replies a women bursts from the closet in which the string ends. Dalton then realizes that the room is full of ghosts who promptly rush forward. It is then shown that Dalton has walked out of his body again and rushes back into it as the ghosts tear his bed sheets in an attempt to get at him. Dalton then awakes in terror in his mothers arms.
Before Josh attacks Renai it is revealed Dalton is at school. As Josh is about to kill Renai, Dalton hits Josh with a baseball bat thus saving his mother. Renai, Dalton and Foster flee to the basement locking the door as they go. Whilst Josh attacks the door trying to gain entry, Dalton offers to go into 'The Further' to bring his real father home. Renai at first refuses until it becomes apparent there is no other way out. Dalton takes the can on string with him so he is able to return.
In the Further Josh, Elise and Carl battle the Old Woman and Dalton enters the red door. When the Old Woman is defeated Josh and Carl escape into 'The Further' but are unsure where to go. As they are surrounded by ghost they hear Dalton calling them. Fighting their way through they then find Dalton who is overjoyed to find his real father. Dalton then begins to lead his father and Carl back home.
Meanwhile back in the real world Josh has broken into the basement ,and on knocking Renai aside, lifts a tool above his head to strike the asleep Dalton with. Just before he can strike Elise attacks the Old Woman killing her thus destroying the demon inside Josh who promptly collapses. Dalton is then able to lead Josh and Carl back into their bodies. Dalton awakes to find Renai clutching his body. When Josh awakes Renai is at first suspicous until Dalton rushes over to his real father embracing him for the first time since he fell into a coma.
Daltons final scene is when him and his father are being hypnotized by Carl so they can forget their experiences and return to a normal life.