Buffy's having slayer dreams about the potentials, and later Spike mentions them, as though he knows she's dreaming about them. I think that idea is put in his head by The First, as he says later that the evil 'beneath you' is in his head. We see him in the basement, going slowly out of his mind.
This is in contrast with the happy family unit of Xander, Buffy and Dawn driving to school. This fits well into the 'back to the begining' theme, with Buffy going back to school and Xander calling himself a 'dateless nerd', the exact thing he was when we first met him in season 1.
Willow preparing to leave the safety of Giles' home, scared that she won't be accepted back. Giles is so sweet, and to think only a few months ago Willow tried to kill him.
From dateless nerd we see Xander progress to cute and flirty as he tries to chat up Nancy, and Nancy is into him, which is sweet. We haven't seen this Xander for a while.
From being crazy in the basement we see Spike, in a blue 'I am sane' t-shirt, which he later rightly calls a costume. He and Buffy talk and she accepts his help. Dawn threatens to kill him in his sleep if he hurts Buffy, which was very cool. Dawn really comes into her own in season 7 and is great in pretty much every scene.
Spike tells Buffy that he can't say sorry, can't ask for forgiveness but he's here and she should use him, this is an echo of Buffy's season 6 speech in which she says she's using him and it's killing her. She says nothing, but Spike later accompanies her to the Bronze in search of Anya, so she seems to accept his usefulness.
The gang confront Anya, which is a nice scene, but it's when she spots Spike's soul-havingness that things get interesting. She's going to tell everyone and Spike doesn't want them to know, he's already told Buffy they're not besties anymore , he wants to put distance between them, as he thinks that's the right thing to to for her. To shut Anya up, he punches her, but she lets her demon out and punches him back.
Then, for me, this is the best moment of the episode;
ANYA
I am so gonna kick your ass.
Spike gets up off the pool table, fully ready to engage Anya in a fight.
SPIKE
Right, bitch. Round and round we—
But Buffy cuts him off by grabbing his arm and turning him to face her. He is in demon face now.
BUFFY
You haven't changed, Spike.
Buffy punches him in the face. He punches back. They continue to fight. Buffy is angry. He's not fighting back anymore.
SPIKE
Working out some personal issues, are we? (Buffy punches and kicks him). Hey, I guess this would be first contact since, uh, you know when. Ooh, up for another round up on the balcony, then? (She hits him again, and he lands on the floor; he laughs) Right you are, luv. I haven't changed. Not a lick. (He's in her face now.) And watching your face trying to figure me out was absolutely delicious.
I love this fight. I love that Spike is trying to goad Buffy into hitting him, to push her further away from him, to punish him, it reminds me of
Dead Things, one of my favourite episodes. Buffy punching Spike in the face, and him accepting it, makes me happy

This is followed by a Xander confronting Anya, telling her to reverse the spell. he also tells her that she cannot continue to blame him for the path her life has taken. She has to take responsibility for the decisions she's made, which is a reversal of their usual conversations, where it's usually Anya telling Xander some home truths.
These two scenes are made ever better by the music being played during, The Von Bondies 'I Come from Japan' and Joey Ramone's 'Stop Thinking About It' - possible two of the best song choices in the shows history.
We see Spike hurting a human (I've no sympathy for Ronny at all) and the combination of the chip and the soul mean Spike falls apart and runs off. Buffy follows him. He's in a church. I'd like to just post the whole script of the following scene as it's so beautifully written. Spike explains about the spark, Buffy tries to touch him, but he pushes her away. He goes to unbuckle his belt and she throws him across the church.
He tries to explain what's happened to him, but he can't bear her looking at him. He says 'I wanted to give you what you deserve, and I got it. They put the spark in me and now all it does is burn'. Buffy realises he got his soul
BUFFY
Why? Why would you do that—
SPIKE
Buffy, shame on you. Why does a man do what he mustn't? For her. To be hers. To be the kind of man who would nev— (looks away) to be a kind of man.
Spike walks toward the cross altarpiece at the front of the chapel.
SPIKE
She shall look on him with forgiveness, and everybody will forgive and love. He will be loved.
Spike's standing only a foot away from the crucifix, staring at it.
SPIKE
So everything's OK, right? (sighs)
Spike embraces the crucifix. Smoke is rising from where he touches the cross.
SPIKE
Can—can we rest now? Buffy...can we rest?
It's an amazing final scene. We finally realise the enormity of what Spike has done and how this is affecting him, and Buffy, who is in tears. This means that everything has changed between them and nothing can ever be the same. He is forcing Buffy to change, as she has forced him previously. It's a great way to set up their new dynamic for the rest of the season. It's another great ending and elevates the whole episode.