The Lost Chapters has a brothel, an additional continent, and extra length. The final boss battle is no longer the same one in the original Fable. That battle still takes place, it just isn't the finale anymore. It also seems like they added some more tattoos, and the drag clothing set has been given a practical purpose. You can whore yourself now.

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Anything good in life is either illegal, immoral, or fattening. - Murphy's Law