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: When Kathryn takes the binoculars from Sebastian, you can clearly see her watch down her wrist. However, in the next shot of her holding the binoculars, her watch is all the way up to the top of her wrist. She never put the binoculars down or moved either. (00:57:45)
Visible crew/equipment: When Cecile sits with her Diet Coke on the floor, Kathryn knocks on the door, and Cecile gets up to open it. If you look by the chandelier you can clearly see the whole boom mic come down into the shot. (00:50:55)
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".
Continuity mistake: When Sebastian is explaining to Kathryn that he had the chance to sleep with Annette but he didn't, he is lying on the bed with Kathryn straddling him. Then he gets up and pushes her over. When the camera switches to a different view of her, her legs and arms are in different positions than they were before. (01:05:00)
Continuity mistake: When Sebastian lies to Annette and says he doesn't love her, he has a tear streak run down his cheek which vanishes during their conversation. (01:13:20)
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.