1428 Elm Street was a place of nightmares for Nancy in the first film. Now it's five years later; Nancy is gone (to an insane asylum, as we learn from part 3), and a new family has moved into the house. Jesse begins having nightmares immediately after moving in. They cause him to wander off and do strange things. His dad thinks he's on drugs, his mom thinks he crazy, and his girlfriend Lisa thinks he's a psychic--that his dreams are premonitions. Jesse doesn't know what to think. All he knows is that there's something inside of him that wants to control him. That something, of course, is Freddy Kreuger. When Jesse and Lisa find Nancy's diary, Jesse starts to think that his dreams are more than just nightmares.
It seems that, since he was thwarted by Nancy in the first movie, Freddy lost a little bit of his mojo. We know he gets his power from fear, and I guess not enough people fear him yet. He's weak. He's still got his brains and desire to kill, he just hasn't got the body for it. That's where Jesse comes in. This movie is different from the first, because Jesse doesn't dream about his own murder, but rather other peoples'. He sees them dying in horrific ways, killed by Freddy. But when they're dead, he finds himself alone, covered in blood, and sporting Freddy's glove. In one dream, he meets his gym coach in a gay S$M bar, and they go back to Springwood High. After doing a couple of laps around the gym, he goes to the shower, only to be followed by Coach, who is being drug by an invisible Freddy via a jumprope. He's tied up to the shower heads, and invisi-Freddy starts whipping him on the ass with a towel. Everything in this movie implies that Jesse's got a little bit of homosexuality buried deep inside him. He doesn't know if he's going crazy, or if he is actually killing these people. But his will to live and the love that he and Lisa share just might be enough to get rid of Freddy for good. The action culminates in, of course, a boiler room, where Freddy is confronted by his old nemesis: fire.
I think this was a fairly interesting premise. I guess they wanted to go a different direction with the follow up to the original Nightmare. It was interesting, but it didn't completely work for me. I still prefer good 'ol fashion Freddy, doing the killing himself without the need of a host body. I'm glad they went back to the old formula after this one. It's cool going back and watching the earlier movies, because we can see just how much Freddy has changed in appearance. He always has his Christmas sweater, his fedora, and his glove, but the effects change drastically of course. Freddy looked weird in this one to me, because I've grown used to the newer ones (having watched Freddy vs. Jason about a bajillion times). But that doesn't change the fact that Freddy is awesome and always will be. Though this is my least favorite of the series, it's still a must for Freddy fans. And it's also (as far as I can remember) the only time a girl has ever, or ever will again, willingly make out with Freddy Kreuger.