Freddy and Jason live onJason decided to return to camp crystal lake and started all over, but decided to keep Freddy's head. Freddy was able to find a new head which was less ugly, but had worse burns and a new arm. Freddy built a new glove, since his old one was at the bottom of the lake, which was slightly different and he went right back to Elm Street
Jason's in a coma at the bottom of the lake and Freddy's stuck in his mindJason can come back for Jason X, but Freddy was unpleasantly surprised to find that nobody alive remembered him and Jason doesn't sleep much. Freddy's in a very nasty situation...
The end credits were part of the film's story.It was a long POV shot from Freddy's perspective. The background was the floor of Jason's house, the dripping blood came from Freddy's severed head as Jason carried it around looking for a place to put it. The blood-loss caused Freddy to hallucinate the credits and the song was Freddy singing to Jason to try to convince him not to use his head as a flower pot.
This is the true end for FreddyAt the end of the movie Jason stuck Freddy's head on his knick-knack shelf. Freddy is thus stuck in limbo; he's not dead so he can't re-enter the dream state, but he's just a severed head so he can't escape Jason's cabin either. He's doomed to sit up there next to Jason's bobble-heads until the end of time.
The whole movie is part of a conspiracyOn the part of Pinhead, the lead Cenobite. Even if he doesn't live in hell proper, it's not outside the realm of possibility that he can freely travel to dimensions that aren't Earth. Over the course of the movies, he's occasionally succumbed to the urge to hurt people just for the sake of it. Tricking people into opening the box is too much work, but feeding a predictable spirit like Freddy the idea of using Jason wouldn't be any trouble at all. He gets to inflict a little more of the suffering that isn't technically in his job description, and then watch to creatures that he more than likely loathed beat the stuffing out of each other.
The movie is set in 2004 or 2005.If we assume that the first movie of "A Nightmare on Elm Street" is set in 1984, then the second film is set in 1989, the third is set in 1990, the fourth and fifth are set in 1990 or 1991, "The final Nightmare" is set in 2000 or 2001. And this film is set four years later of "The Final Nightmare".