Even though Nightmare on Elm Street 2 has direct ties to movies one and three in the franchise it is the evil step-sister to the franchise much like Halloween 3 is to the Halloween franchise. It has brief ties to the series but really is a stretch. It is rumored that Wes Craven wanted nothing to do with the series and not due to the gay subtext.
Jesse is the main character. He lives in Nancy’s old house. His girlfriend Lisa finds Nancy’s diary. At first when it discusses how she likes to watch Glen undress across the street they think it’s a dirty secret but Jesse is seriously freaked out when she starts writing about terrible nightmares he’s been having.
Jesse has walking nightmares. He ends up in a gay leather bar where he finds his coach that is always giving him and his best friend a hard time. The coach forces him back to the school’s gym. For some reason he is sent to ‘shower’ while the coach gathers up jump ropes. It appears as if he plans on raping Jesse and from the way Freddy reacts it’s the way that he feels too. He picks at the Coach and then drags him to the showers where Jesse is. He uses the jump ropes to tie him up and strips him naked as Jesse watches. Freddy whips the coach with a towel before killing him. Jesse screams but we see him wake up in bed.
He tries to tell Lisa and his best friend that he dreamed it…afraid that he did it……but Lisa tries to convince him it was just a dream despite the bloody footprints left in the shower.
Ironically in this movie, Freddy just wants Jesse to be his embodiment on earth. He wants to possess Jesse like Chucky possesses the Good Guy doll to do his killing for him. Jesse is relatively strong despite the nightmares. He fights it when Freddy wants to kill his little sister. Yet when Jesse tries to have sex with Lisa Freddy uses this emotional scattering of thoughts to take him over. He almost kills Lisa and threats the pool party. Lisa’s dad shoots at him and he’s somehow able to get away.
Jesse ends up in his best friend’s room but Freddy kills him and he tries to flee. Lisa tracks him down to the power plant to try to save Jesse. She even kisses Freddy to try to reach Jesse. She has read Nancy’s diary and is convinced that Nancy did not go crazy from seeing Glen killed and her mother’s suicide but the things really happened. She convinces Jesse to fight.
Jesse survives the power plant but the Monday after the party they are on the bus and he is still experiencing PTSD from the fight from Freddy. The opening nightmare that Jesse experiences at the beginning of the movie seems to be a foreshadowing of the end of the movie.