The Adventures of Elmo in Grouchland (1999)

Elmo loves his fuzzy, well-worn blue blanket better than anything in the whole world. In fact, they are inseparable...a perfect team. Elmo would never let anything happen to it-until a tug-of-war with his friend Zoe sends his beloved blanket into a faraway land and Elmo in hot pursuit. Facing life without his cherished blanket, Elmo summons all of his courage and determination and sets off on an action-packed rescue mission that plunges him into Grouchland-a place full of grouchy creatures, stinky garbage and the villainous Huxley. Elmo also learns an important lesson about sharing, realizing that he was selfish with his friend and responsible for what happened.