  We present high resolution imaging of the puzzling radio and optical nebula
G70.7+1.2 with the Keck Observatory's laser guide star adaptive optics (LGS-AO)
system and the Chandra X-ray Observatory. The archival X-ray observations show
a hard (Gamma ~ 1.8), low luminosity (L_X ~ 4 x 10^31 ergs/s) point source at
the center of the nebula. Follow-up LGS-AO near-infrared imaging of the Chandra
error circle reveals a relatively bright (K' ~ 14 magnitude) counterpart. Both
its color and brightness are consistent with a heavily obscured B-star or
possibly a late-G/early-K giant. The most plausible explanation is that this
newly discovered X-ray source is a non-accreting B-star/pulsar binary powering
the radio and optical nebula. If so, the luminous Be-star discussed in the
literature seemingly embedded in the nebula is not the dominant force
responsible for shaping G70.7+1.2. Thus, we suggest that G70.7+1.2 is the
result of two unrelated objects (a B-star X-ray binary and a Be star)
interacting with a dense molecular cloud. With this explanation we believe we
have solved the mystery of the origin of G70.7+1.2.
