Heather mocks the evidence, which is pretty circumstantial. Holmes connects the dots from that "NOVOCAINE" to the New York Times crossword. And they've matched her handwriting on the consent form. She's under arrest!
So... she built a pipe bomb attached to a pager that didn't work in Manhattan? And after it didn't blow up, she figured she'd just go shoot the guy and wall him up in his own house? She should have at least searched him to get the key for the safety deposit box that hid his blackmail tape. And maybe she should have gone in to get the bomb at some point. This is just sloppy work.
Brownstone. Alfredo rings the bell. He is here to ignore Holmes's message telling him not to come. And to show him this awesome car he has. See, he graduated from "stealing cars" to "being hired to test security systems." Would Holmes like to show off how good he is at defeating security systems? He claims he would not, since he knows he could do it. But Alfredo knows what buttons to push: "This stuff's not even on the market yet. So how would you know if you could beat it?" Holmes can see through all these tactics. Watson says that one way or another, she'll be out of his life in a few weeks. And she wants him to be ready when the time comes. Holmes claims to be entirely self-sufficient.
Holmes goes down (without lockpicking tools) to ask about the car, like what kind of security systems he'll be facing. Alfredo will not give any information about what security systems are there. Holmes again says, "I'm entirely self-sufficient, you know." And then he prepares to break into the car.