Continuity mistake: Near the end when Kathryn is handed a copy of Sebastian's journal you can see as she is reading it that she has nothing around her wrist, however when the headmaster comes out he pulls out her cross and it is twisted several times round her wrist. (01:32:05 - 01:33:00)
Visible crew/equipment: At the end of the film, when we see Annette driving the black car, as the camera pans up, you can see the camera crew in the reflection of the side of the car. (01:33:30)
Continuity mistake: In the final scene where Annette is driving Sebastian's car, in a close up shot she is wearing a watch, but in the next overhead shot, she is not. (01:33:30)
Continuity mistake: In the final scene where Annette is driving the Jaguar and having flashbacks, watch as she drives past lovely rolling hills and pastures. Cut to a helicopter shot of her driving the car along a New York freeway (FDR I think...) This mistake has been confirmed by the director. (01:33:35)
Continuity mistake: When Sebastian "catches" Blaine and Greg, watch when he says "After all, it is you who is bad mouthing me to Annette Hardgrove". In shots of Sebastian's face, his hand is tipping Greg's chin upwards. In shots of Greg's face, Sebastian's hand is nowhere near his face.
Continuity mistake: When Sebastian is breaking up with Annette, her pink cardigan is pulled back and the top of her bra is being revealed above her dress. In the next shot, the dress is pulled up and the cardigan pulled over.
Continuity mistake: In the end when Kathryn receives a copy of Sebastian's journal, the title page reads, "Cruel Intentions". When several moments later, just before the headmaster takes the crucifix and opens it, the camera pans across the journal in her hands, the title now reads "Cruel Inventions".
Character mistake: When Kathryn reads the journal copy in the final scene, the camera shows some pages she reads. At one moment, one of the headings reads, "WORLD OF FREINDSHIP".
Continuity mistake: When Kathryn and Annette are talking in the bathroom, Kathryn has a ring on both of her middle fingers. When she goes outside to see where everyone went, the rings aren't on her fingers anymore.
Answer: Well, this is my own opinion, but I think that Annette and Katharine were just pretending not to know each other. Remember, Katharine doesn't know how much Annette knows and Annette knows what kind of deception Katharine is constantly pulling off. I also think that Annette uses the line "turning to God" to foreshadow (and maybe scare) Katharine. Naturally, it didn't work until the journal got out.