Revealing mistake: Several times during Spike's escape from The Initiative, his reflection can be seen in the glass. Vampires aren't supposed to have reflections. (00:13:00)
Continuity mistake: In 'The Initiative', Riley, Graham and Forrest are looking in through the windows of Stevenson Hall with thermal goggles looking for Spike, they see him walking towards Willow. When we see Willow and Spike seconds later he is still sitting on the bed where he was for most of the scene. (00:37:30)
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.