"A Past to Be Erased" (消し去りたい過去, Keshi Saritai Kako) is episode 215 of the original Naruto anime.
When Menma is injured by one of the bandits, it is revealed that he was once one of them, and that he was at the town during the attack. Despite this, Menma is willing to risk himself to help fight off the bandits, and tells Naruto of the leader's master plan to flood the town with a dam. After revealing that he never lost his memory, Menma sacrifices his life to cause a rockslide to save the town. Naruto defeats the bandit leader and mourns Menma's death.
Earlier it was said that the mark on Menma's arm shows up when he sweats, but at one point he has sweat all over him, but the mark is not visible.