Continuity mistake: When Alice is in the cinema she has a drink of coke. The Coke has a plastic lid on it. But when Alice turns around to investigate the strong winds, there is no plastic lid on the Coke. Then in the next shot the plastic lid is back on it. (01:01:10)
Revealing mistake: When Alice is being blown towards the cinema screen, she grabs hold of one of the cinema chairs. You can clearly see she is actually holding a handle which is on top of the chair. This is blatantly visible when she lets go of it and flies off. (01:01:35)
Continuity mistake: When Alice is holding onto the edge of the wall in the cinema because she is being blown to the screen, between shots Alice's shoe flies off of her foot twice. (01:01:45)
Continuity mistake: When Freddy is pushing down on the weight Debbie is holding, in one shot Debbie is holding the middle of the weight with both hands, then when the shot changes she is holding the weight with one hand either side. (01:06:10)
Continuity mistake: In the scene where Debbie's arms come off you see two right arms fall to the ground instead of a left and a right. (01:06:35)
Revealing mistake: After the truck has its collision with nothing, the chain yanking it backwards is visible. (01:09:00)
Visible crew/equipment: In the scene where the souls are coming out of Freddy's chest, in the first close-up on the bottom left of the screen you can see a man's hand holding a black stick to manoeuvre the little arms. It's real fast but noticeable on standard play. (01:20:45)
Visible crew/equipment: In the scene where Freddy's head is torn, if you play it slowly, you can see a sleeve and wrist coming out of the wall behind Freddy and pull the prosthetic head back. (01:20:50)
Revealing mistake: When Kristen is crawling on the ceiling in Freddy's house after falling through the sand, her hair is still plastered against her head, neck, and shoulders, not hanging down making it obvious that the crew shot the scene upside down.
Plot hole: Freddy is killed at the end because he sees his own reflection in a mirror, which causes the souls in his body to revolt and kill him. But this weakness to mirrors and reflections doesn't fit in any other film of the series. He repeatedly appears in mirrors in the other films, and in the climax of "Dream Warriors," he even appears in a hallway of mirrors that are facing each other, where he would have seen his own reflection multiple times. No matter how you slice it, his death in this movie doesn't add up in the overall context of the series.
Continuity mistake: When the restroom door closes on Rick, elevator buttons can be seen on the wall. In the next shot, the elevator buttons are coming out of the wall.
Continuity mistake: When Dan is wheeled into the operating room, we hear a respirator machine going in the background. Yet he's fully awake and not hooked up to any breathing equipment when he's being brought in. A machine would not be going like that unless the patient was fully under and intubated.
Other mistake: The 3rd movie takes place 5 years after the original, since Kristen is still in high school this one can't take place too long after that. How does Nancy's house get so run down in only 5 or 6 years?
Answer: As Kristin was being burned to death in the boiler, she passed her ability to pull other people into her dreams to Alice. This enabled Freddy to get new victims.