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?
A Nightmare on Elm Street 4 (1988)
1 other mistake - chronological order
Directed by: Renny Harlin
Starring: Robert Englund, Brooke Bundy, Lisa Wilcox, Rodney Eastman, Andras Jones, John Beckman, Kisha Brackel, Wanda Bursey
Revealing mistake: After her brother's death, there is a scene in which Alice starts practicing with her brother's nun-chuks. They never show the real actress doing the tricks; instead, they cut to an angle from behind her and show a double who has darker, shorter hair than the real actress and is a bit bigger. (00:56:45)
Freddy Krueger: Sayonara, Rick-san.
Trivia: The diner that Alice works at is called the "Crave Inn", probably a nod to Freddy creator Wes Craven.
Question: Why does Freddy use Alice to gain access to new victims?
Answer: He'd killed her friends in the previous movie, remember? When he came back she'd had time to recover and make new friends.
That was Kristen, not Alice. Alice gives the answer to this question herself, while talking to Dan in the diner. She says that Kristen was the last of the children of the people who killed Freddy, and "maybe Freddy can't get to the new kids unless there's someone to bring them to him."
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.