Like Friday The 13th
(also developed by LJN for the NES), the game is separate from the movie storylines, in that it doesn't follow any one of the plots established.
Original game concept
The original concept of this game varied greatly from what was eventually released. In the original concept, players were to take on the role of Freddy Kruger himself, and kill the teenagers who were attempting to gather his scattered bones in order to rebury them. Not surprisingly, this idea was scrapped and now only a few blurbs in Nintendo Power and a Nintendo of Europe poster with a few screenshots of the planned game exist.