Audio problem: When Buffy kills the vampires dragging Xander at the beginning, we hear two impact sounds but don't hear either of them turn to dust. They were only a few feet away and there was no other sound to cover it up. (00:01:00)
Audio problem: When everyone is in the Bronze - just before the vamps show up - you hear the first line of a song being played, Ballad For Dead Friends by Dashboard Prophets, cut to outside and you see the vamps strolling along and killing the doorman, then cut back into the Bronze and the same line plays again. This is a total error in cutting the show, it is stated there is no live band but still the same line plays twice when that is not how the song goes.
Chosen answer: Angel is saying that he is still jealous and Buffy recognizes that this is his way of saying he wishes that they could be together. That is why they both smile.