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.
Revealing mistake: During Rick's nightmare, we can see the fake reflection trick in action when Kristen is taunting him in the mirror. When she turns around, the actor playing her reflection turns out of sync, and brings the wrong hand up to her mouth. (00:53:13)
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.