*Contains Spoilers*
In Nightmare On Elm Street 3, Freddy shapeshifts into Nancy's father and Nancy hugs Freddy/Dad after Freddy/Dad told her he was sorry for all the trouble he caused her and told her that he would always love her. Freddy stabs Nancy in the stomach, and Nancy dies, but not before clawing Freddy with his own claw, and Freddy dies before Nancy does. Lots of audience members were sad to see Nancy die, as she was portrayed as a tough, smart girl, who was only trying to help the teenagers of Elm Street be safe from Freddy, and she didn't even KNOW these kids.
The original ending for Nightmare On Elm Street 3 did not have Nancy die at the end. She originally was supposed to stab "Dad" who she knew was Freddy, and Freddy was supposed to be the only one who died, but at the last minute, the New Line crew decided to kill Nancy too. This upset original director Wes Craven, who never wanted Nancy to die. Wes brought Heather Langenkamp to play herself in New Nightmare.
In the Original Nightmare On Elm Street, the whole Nightmare movie was supposed to be one long dream, and Nancy was going to be shown saying something like, "You wouldn't belive the nightmare dream I had last night to her three friends, who are still alive, since they only died in the nightmare. Wes wanted the movie to end like this because he wanted Nightmare On Elm Street to be a one time movie but Robert shaye, New Line Cinema producer said, "Hell no," because he wanted a franchise. Robert said, "Either you let me make it into a franchise, or the first Nightmare On Elm Street doesn't happen at all." So, Wes compromised, and about 8 other "Freddy" Movies were made.