When Xander says, "It's a loop... like the Mummy Hand!" he is referring to Buffy the Vampire Slayer: Life Serial (2001) in which Buffy is caught in a time loop and must battle a severed, magical Mummy's hand.
The trivia items below may give away important plot points.
This episode (7.10) takes place mid December 2002, 4 years after Buffy stopped Angel from killing himself due to the First haunting him in Amends (3.10), which took place mid December 1998. Buffy revisits the same cave underneath where the Xmas tree lot was in Amends, which is where she finds the Turok-Han.
It is assumed by the gang that when Buffy dies, a new Slayer would activate; however, Faith is the true Slayer since Buffy had already died and her successor activated who also died thereby activating Faith. Buffy, while having the power of the Slayer, is not actually the Slayer.