Ah, sexy cat-Cordy.
Yep, Buffy lost her powers and I think she was dressed in some kind of Victorian outfit?
No, Angel had no idea about that part of the curse. He assumed that just getting his soul back and suffering guilt over all the bad things he did was enough. But to be honest, that part where he loses his soul if he experiences any true happiness never made sense to me. Why even allow for the possibility of Angelus being unleashed once again upon the world?