Moment Between William and Jeffy Never Explained (Spoilers)

There is a lot I don't understand about this film but for now I'll just focus on two elements. While sleeping or dozing next to Annabelle on the bed, William is jolted awake after experiencing what I presume to be a flashback/memory of Jeffy and he in the field hospital. Jeffy is shaking William and says something to him - what, I don't recall. We can see that Jeffy is terribly angry at William. I can assume that it has something to do with Annabelle - maybe Jeffy found out about her and William having a relationship? But just before this Annabelle recounted that Jeffy had died a horrible death, and we also see how infirm he is in the flashback/memory when he confesses to William about his feelings for Annabelle. So, what was the deal here? Were William and/or Annabelle somehow responsible for Jeffy's death? (I had suspicions about this even before the flashback/memory - there was something about the way Annabelle discussed Jeffy that didn't sit right with me).

One more thing (didn't have room for this in the title) - what happened to Todd at the end? It seemed like he was somehow flashed out if existence by one of the demons, but I couldn't really tell (it doesn't help watching an SD movie in an HD TV).

If anyone has theories, I'd like to hear them!