When you finally encounter General Guy after clearing most of Shy Guy's Toybox, he says they've been given the order to protect the Crystal Star and that Mario is trespassing. Also, he is responsible for all the robberies in Toad Town.
Before rushing in to fight you, he sends waves of Shy Guys to charge at you, the first being a group of ordinary Shy Guys attacking all at once, then two Stilt Guys, and finally two groups of Shy Stacks. Once the Shy Guys have been defeated, he will fight you, but on his toy tank.
Once defeated, you will be given Muskular, the fourth Star Spirit.