You're both wrong... sorry, but true. The dog jumps out of the boiler and bites Kristen on the left arm... she then awakens and wraps her injured LEFT arm. The only trick to this is the camera shooting into the mirror in her bedroom. No real mystery here folks... also, needless to say... not a slip up.
However, I think the real point you're missing is the fact that you're both watching the wrong movie. That scene took place in Nightmare 4, Dream Master...
LOL, oh well:)