Relations between the Cheun Jen Sect and Peach Blossom Island began when Central Divinity Wong Chung Yeung met East Heretic Wong Yerk See some time before the First Mt. Hua Sword Tournament (during the years that preceded the beginning of LOCH). Wong Chung Yeung and Wong Yerk See were good friends and shared mutual respect and admiration, and we get a glimpse of their friendship in the ROCH flashback that depicted how Wong Yerk See helped Wong Chung Yeung to discover Lam Chiu Ying's deception in their "stone-writing" competition by using a fossilized stone with special properties that soften other stony surfaces.
Friendly relations between the Cheun Jen Sect and Peach Blossom Island continued until after Wong Chung Yeung's death. Wong Yerk See seemed genuinely grieved by the news from Chow Bak Tung about the passing of their mutual friend (although Wong Yerk See was also secretly somewhat glad because with Wong Chung Yeung dead, he had a legitimate shot at obtaining the 9 Yum Jen Ging for himself).
Things began to go sour between the Cheun Jen Sect and Peach Blossom Island after Chow Bak Tung traveled to the island to get even with Wong Yerk See following the former's discovery that the latter had tricked him into revealing the text of the 9 Yum Jen Ging. Angry because his coveting of the 9 Yum Jen Ging had cost him the life of his beloved wife, Wong Yerk See imprisoned Chow Bak Tung on Peach Blossom Island for nearly twenty years. The Cheun Jen 7 Disciples tried, but failed to rescue their martial uncle. During this time, an enmity grew between the Cheun Jen Sect and Peach Blossom Island. The Cheun Jen disciples, forgetting that Wong Yerk See had once been their beloved teacher's good friend, began to regard Wong Yerk See as a menace to wulin. Cheun Jen Sect acolytes would have run-ins with Peach Blossom Island students Mui Chiu Fung and Luk Sing Fung (Luk so hated the Cheun Jen Sect that he did not even allow his son, Luk Gwoon Ying, to marry the girl Ching Yiu Ga because Yiu Ga's family had deep ties with the Cheun Jen Sect, and Yiu Ga herself was the student of Sheun But Yee of the Cheun Jen 7 Disciples) during LOCH.
The conflict between the two camps came to a head when Tam Chui Deun was killed at Ox Village near Lin-An about halfway into LOCH. Strangely, although it was West Poison Au Yeung Fung who caused Tam Chui Deun's death, the remaining Cheun Jen Disciples blamed Wong Yerk See for it (why?). That led to a confrontation between the surviving Cheun Jen Disciples and Wong Yerk See a few months later, with added cause for hatred on the part of the disciples due to their errant belief that Wong Yerk See had also recently murdered their friends, five of the Gong Nam 7 Freaks. As it turned out, the Freaks' murders were part of a machination by Au Yeung Fung and Yeung Hong to destabilize wulin for their own benefit.
After that, relations between the Cheun Jen Sect and Peach Blossom Island became friendly again...but how? Wong Yerk See was exonerated for the murder of the Freaks, but why did the Cheun Jen 6 Disciples suddenly also forgive Wong Yerk See for the death of Tam Chui Deun and the 20-year imprisonment of Chow Bak Tung? We never saw either side make any apologies or agree to let bygones be bygones, but that's how they treated matters after the Au Yeung Fung/Yeung Hong incident was resolved. From that point forward, the Cheun Jen Disciples would treat Wong Yerk See and other Peach Blossom Island figures with respect and friendship, and the Peach Blossom Island associates reciprocated. How did this come about?
Some have floated the reasonable hypothesis that Wong Yerk See and the Cheun Jen Sect came to terms because of Gwok Jing. Gwok Jing was Wong Yerk See's son-in-law and also a quasi-disciple of the Cheun Jen Sect. I doubt, however (given Wong Yerk See's personality), that Wong Yerk See would drop any hostility he held towards the Cheun Jen Sect (for Chow Bak Tung, for the many times they attacked him or his students) in deference to Gwok Jing. Remember: Wong Yerk See only tolerated Gwok Jing because Wong Yung was deeply in love with him. Until the end of ROCH, when age had mellowed him out considerably, I don't think Wong Yerk See genuinely *liked* Gwok Jing...certainly not enough to forget any lingering conflicts he had with the Cheun Jen Sect on Gwok Jing's account.
So it is puzzling how and why the Cheun Jen Sect and Peach Blossom Island reconciled towards the end of LOCH.