Revealing mistake: In the last scene of the episode, Angel kicks the guy out of the glass building. This guy's a vampire, and you can see his reflection in the glass windows. Vampires aren't supposed to have reflections.
Continuity mistake: When Angel kicks the vampire out the window, he does it with little effort and movement, but when the shot goes from outside the building, he's swinging his body like he's put more into it.
Answer: Everybody including Angel saw her. After helping them and then being left alone to talk to Angel, Cordelia says that the Powers That Be let her come back one more time to help them. After Angel gets a call saying that she died, he realises that it was her spirit that was helping them the entire time.