Continuity mistake: Willow is turned into a ghost. Throughout the entire episode, she can't touch anything (can't turn the pages of a book, etc.), yet towards the end when she and Giles go to Ethan's shop, and she leaves, you can hear that she opened and closed the door, even though she can walk through walls and can't actually touch the door. The curtain moves when she leaves too.
Other mistake: When Buffy and Willow find the picture of the noblewoman in the Watcher's Diaries, Buffy asks "Who is she?" and Willow replies "It doesn't say", but if you watch closely you can see that during the brief shot of the book her name is visible next to her picture.
Plot hole: Giles tells Willow to leave him while he extracts information from Ethan on how to break the costume spell. By the time Giles smashes the statue Willow has already found the others, who had left the house where she thought they were and are hiding in a completely different area of the town. No matter how long it took Giles to beat the information out of Ethan, there is no way Willow could have gotten back to the house, realised they were gone and tracked them down before the spell was broken. As a ghost, it is possible she could have happened across them even though they were hiding, but seems unlikely.