11 years later... heh *spoilers*
I think it was Danielle and Christy who were found dead. There was really no evidence to suggest that Danielle survived, otherwise wouldn't they have shown her?
There were times when Sarah seemed rather "final girl" like with her outsider studious tendencies, and then there were other moments where she was creepy as hell and that started even when they were back at the school. Her weirdness wasn't really unnoticed by the other two girls, either. They thought she was stuck up because she was from out east, so she was no doubt the newest addition to their group.
If I had to guess, Sarah was probably an illusion in the minds of the everyone (not just Albert) who met the group over the course of the movie. I was tempted to guess she was just another student who was possessed, but Albert had taken an axe to her at the end and there was a body of a girl missing in the aftermath, so she was definitely otherworldly. But she was an ghostly presence that even the folks at the diner could see.
As far as a motive, the spirit most likely wanted to prove that the "curse" as the psycho father said at the start was inescapable and would draw Albert back to the lake through deceiving ways, even as he tried to lead a normal life away from the location. I believe that Albert did the killings since he was covered with blood.
I'm not sure how Lily's death by wolf attack factors into this, other to maybe guess that they needed to have a death scene early on because otherwise no kills would occur until the final half hour.
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