How do dreams fit into the decision tree model?
If we take the model as base for the working of the conscious, based on feedback of the neural network in the brain, we can deduct what could cause images, sound and emotions to be received by the Claustrum, even (or as the model will explain: especially when) if the brain is highly inactive.
Cause of dreams
When the brain stops receiving impulses and stops processing signals through the network, the brain will still hold requests to the different parts of the network to give to the Claustrum and/or Prefrontal Cortex. This active residue, to my expectation, is result from the fact that activation of certain parts require a specific type and amount of energy. If the energy doesn't match the thresholds, it will cause 'cognitive dissonance', or emotional discomfort and feed back to the PC and Claustrum. Because the signals come from areas of the brain that process specific types of 'data', the return value will cause the Claustrum to build an 'consciousness' from that data. Because this data is not visual or auditive in nature, most of the time, it will be processed on emotional level. Causing them to activate memory segments, to receive an emotional feedback to adjust the neural network levels for the specific area.
A dream can be seen as a strong feedback signal from a brain segment, that causes the Claustrum (and by lucid dream to extend the Prefrontal Cortex as well) to present the subconscious with an emotional balance issue. The outcome will feed the energy back into the the brain segment that it was meant for and cause adjustment to it.
So, why do we see items and people in our dreams that we have never met before ?
Because the mind will fill in 'the blanks' from memory, but the quality of the memory and how emotions change the visuals, can cause us to see things we never seen before. Remember, that during our life time we go through a tremendous period of magical thinking, where everything is possible.