Continuity mistake: After Frank 'bumps into' the hearse leading the funeral procession, he sees Ray's ghost running up the street towards him. In Frank's front close-up as he raises his arms in shock, the whicker baskets in front of the pet shop are on his left. As Frank hits the ground the baskets are beside him and they are arranged quite differently. (00:26:15)
Continuity mistake: During the dinner with Lucy at the restaurant, Ray's ghost knocks over the wine glass and the wine visibly spills onto Frank's vest, yet, the vest is dry in the following shots. (00:36:40)
Continuity mistake: During the dinner with Lucy, Frank goes to the lavatory to dry his pants and when he pulls on the paper towels more than a foot is left hanging out the bottom of the dispenser. However, in the following shots it's either nothing or a some of it sticking out of the dispenser. (00:37:00)
Continuity mistake: At the police station, when Dammers tells Lucy about the day that Debra died, there is a shot of the utility knife in Frank's toolbox and the initials F.B. are written in white on the knife. Later, when Lucy finds Frank's utility knife in Mrs. Bradley's bedroom, the initials are written differently. (00:44:30 - 01:05:50)
Continuity mistake: At the police station, the filing cabinet beside Lucy is visible in the wide shot, just before Dammers says, "Debra's corpse had the number thirteen carved into its forehead." Then, in Lucy's close-up different things are on top of the filing cabinet. (00:46:10)
Continuity mistake: At the police station, when Agent Dammers sticks his badge in front of Sheriff Perry's face, the position of the badge in his hand differs in the shots facing Perry and the close-ups of the badge. (00:56:10)
Continuity mistake: The red marks on Frank's neck change in consecutive shots from the time he receives the injury. (01:29:30)
Continuity mistake: After Frank takes the urn from Lucy, he reaches the bench near the chapel and a wood chair lies on its side beside the bench. After Dammers catches the urn, that chair is now upright behind Frank. (01:34:55 - 01:35:50)
Continuity mistake: When Frank reaches the chapel he places the urn down and there are scattered pieces of wood hanging over the edge of the bench. After Frank breaks through some of the wood on the chapel door he causes the pedestal to fall over on the bench and the wood is gone. (01:34:55)
Continuity mistake: When Frank hacks away at the door of the chapel, the broken wood at the openings differ in the close-up of Frank's face through the door and the following shots. (01:35:00)
Continuity mistake: Frank catches the statue, that he accidentally knocks over near the chapel. The way he catches it is completely different in the first shot facing up and the next close-up. (01:35:05)
Continuity mistake: In the sanatorium, after Frank accidentally knocks over the statue outside the chapel, the pedestal falls onto the bench sending the urn flying above. In the overhead wide shot the urn flies upside down as it reaches the window, yet, in the next close-up the urn is right side up as it comes through the window. (01:35:10)
Continuity mistake: At the cemetery, as Frank grabs Ray the ghost to pull him from his grave, the grave diggers are seen shoveling dirt into the half-filled hole. A few seconds later, Frank yanks Ray out and the grave is now completely filled and the grave diggers are gone.
Continuity mistake: The colours on the dial of the freezer Frank goes in changes between shots. When Lucy turns it down you can see the colours are light and dark blue. Later on in the wider shots and when she tries to open the door and Milton Dammers stops her, you can see it's blue and red.
Continuity mistake: When the 3 "flying" babies crash into their mother, look at the one in the red clothes. In the wider shot it has a lot of dribble on its chin, but this vanishes in the closer shot.
Chosen answer: For the most part, the actors playing the ghosts were shot separately on blue-screens, and then comped into the scenes. (By removing the blue background through a process called "color keying", and placing them over the scenes) They were simply given a blueish glow and made semi-translucent to complete the effect. It was pretty cutting edge back in the 90's, but nowadays, it'd be very easy to make the exact same effect using a simple program like Adobe After Effects.
TedStixon