Continuity mistake: The first night that the Gentlemen float through the college, they are on the 2nd floor one minute (all the room numbers start with 2), then they turn a corner and are suddenly outside room 118, a floor below.
Continuity mistake: Near the end, when Spike takes the cup of blood from the fridge, we can see that it is full to within a 1/4 inch of the rim. However, when the shot changes and he drinks it, he tips the cup almost 45 degrees before putting his lips to the cup and drinking. If the cup had been as full as previously shown, the blood would have begun pouring out long before Spike ever drank form it.
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.