Continuity mistake: Near the end of the movie the camera pans to different villagers as they notice Willow returning after his journey. One of the villagers they show is Willow's wife, although they show her in another scene (a minute or so later) walking from a different area and noticing Willow for the first time (again).
Continuity mistake: When the midwife runs off with Elora, the baby is practically bald. The "dogs" are immediately sent out for them (as you can see and hear the Queen ordering on screen), but they don't catch up until the baby has grown a full head of red hair. Even the fact that you see the midwife struggling through snow to a green forest, supports this. She is going over the mountains (looking down on the castle), and her pursuers still are not able to follow the tracks she left in the snow.
Continuity mistake: When Willow rows out to Raziel's island, he is bone dry, but when the next scene inside the hut opens, he is soaked. In the novel based on the original script, there is a scene of a lake monster which attacked Willow and Raziel as they returned to shore; they shouldn't have cut it out, I think... .
Revealing mistake: When Bavmorda and Raziel struggle for control over Sherlindrea's wand (up in the tower Ceremonial Room), lightning bolt shoot out of the wand's tip, and a monolith (among other things) is blasted. The monolith looks like it has been pieced together from cast plastic parts; the fragments' edges are too smooth.