The problem is actually in the first sentence. "Now" requires the present
perfect, not the past perfect.

  He has returned now.
  He had returned now.

This is wrong.  "Now" does not affect the tense of the verb at all -- if

   Now, her darling baby boy will return, all grown up.

Sounds pretty weird to me. But, point taken. I was looking for any 
possible tense disagreement since that's what RM was looking for. If 
"now" isn't meant as "the present" but rather as "in view of the 
circumstances" (eg. now that he had returned) or something like that, it 
doesn't have to agree, but without the other sentences, it's hard to say.

the story is in past tense, this sentence should be past perfect, since
it refers to an event earlier in the story.

If someone is thinking, it could be present. If past though, better to 
take out "now" and leave it as "had returned". I agree with Freemage's 
suggestions.

"She might have to kill him" looks confusing unless you know that
English does not have a future tense in the same sense that it has a
present and past tense.  Instead, there are modals indicating
possibility that themselves can be in the present or past tense. 
"Might" is the past tense of "may," and the sentence, in present tense,
would be "she may have to kill him."  The issue is further confused by

It seems out of date to distinguish between may/might as present/past. 
Oxford University Press agrees with me (ok, ok, one of their many 
thousands of publications teaches "may" and "might" as completely 
interchangeable - I couldn't find a reference in anything better...).