Here's how it happens:
* The Incident: During a frenetic shootout between the survivors and the Others, Shannon is caught in the crossfire.
* The Shooter: It is initially unclear who shoots Shannon, but the scene is later revealed to be the work of Michael, who is desperately trying to save his son Walt.
* The Aftermath: Shannon collapses and dies in Sayid's arms. This event deeply affects Sayid, as they were romantically involved, and sets off a chain of events for Michael, who is overcome with guilt.
It's important to note that the episode is deliberately designed to be unclear at first about who shot Shannon, creating tension and suspense. However, it is ultimately revealed that Michael, in his frantic state, was responsible for her death.