Continuity mistake: In the 1978 flashback scene, Michael does not have 6 bullet wounds in his chest from when Dr. Loomis shot him moments earlier.
Continuity mistake: After fake Michael jumps from the 5th or 6th floor of the hospital, Tommy and the others just take a few seconds to get to the street.
Continuity mistake: The mental patient jumps from the window facing the ground. When the crowd gathers around him he's face up on the ground.
Continuity mistake: In the flashback to 1978, Lonnie has a pumpkin bag with him, but in the 1978 original, he didn't.
Answer: The flashback occurs some time after the ending of the first movie. They likely just separated in the meantime.
TedStixon