Peter flirts with Stiles and Derek projects his issues.
Stiles: "What happens after you find Derek?"
Peter: "Don't think, Stiles. Type."
Stiles: "You're gonna kill people, aren't you?"
Peter: "Only the responsible ones."
Stiles: "Look, if I do this, you have to promise to leave Scott out of it."
Stiles thinks Derek is beyond saving when it comes to Peter. He thinks Peter is going to make Derek kill people. He's going from his Oh my God I don't want to deal with Derek ever into an actual crisis. Now Derek isn't the annoying one anymore, no, a very bad man is about to use him as a weapon.
Stiles: "Wait, what theľ That's where they're keeping him? At his own house?"
Peter: "Not at it. Under it. I know exactly where that is. And I'm not the only one."
Derek is no longer just a weapon, now he's also a victim, and Stiles' emotional involvement is about to make him feel really shitty for the way he handled this entire thing.
Stiles: "Dad, tell me. Look, you know it has something to do with Derek."
Sheriff: "What? But I thought you two said you barely knew him."
Stiles: "All right, we might know him a little better than that."
Interesting. Stiles confesses to his father about Derek when it isn't really necessary to bring him up at all. And he admits to his dad that Derek is more than just a casual acquaintance. It solidifies something in their relationship because it is no longer just in Stiles' head. It's something. It's fucked up and sideways, because the Sheriff still thinks of Derek mostly as a criminal, but it's something.
Stiles figures out a piece of the puzzle he'd been missing before - that the Argents and specifically Kate were the ones responsible for the Hale fire. Stiles just figured out that he left Derek in the hands of the people who killed his family.
Derek to Scott: "And gonna risk my life for your girlfriend, huh? For your stupid little teenage crush that means absolutely nothing. You´re not in love. You´re sixteen years old. You´re a child."
Oh dear! This is because he was in love with Kate and it turned out to be the worst mistake of his life. That means he considers Stiles being a child, too. Second there is one more reason why Derek is this sensitive in that matter which we will figure out in season 3a/8.
Chris: "Did Scott try to kill you on the full moon? Did you have to lock him up?"
Stiles: "Yeah, I did. I had to handcuff him to a radiator. Why? Would you prefer I locked him in the basement and burned the whole house down around him?"
Chris: "I hate to dispel a popular rumor, Stiles, but we never did that."
Stiles: "Oh, right. Derek said you guys had a code. I guess no one ever breaks it."
Stiles: "What if someone does?"
Chris: "Someone like who?"
Stiles: "Your sister."
Stiles is really angry and bursting with emotion. That's not sarcasm, it's empathy and maybe a little guilt. Stiles refers to Derek rather than Scott as his source of werewolf information. But when exactly did Derek tell Stiles about the code? And how clever of Stiles to figure out that Kate is responsible for burning down the Hale house. He thinks a lot about Derek, huh?
Showdown. Derek takes Peter's life. Stiles is a witness. As we learn later it´s not Derek´s first kill.
Stiles and Derek both are a little bit more damaged after all of this. Derek may have figured out that Stiles left him at Kate's mercy. Stiles may be rightfully wary of Derek as an Alpha.
Stiles still wears the white shirt and grey tie. At the end he wears a black shirt with the imprint "PROTECT THIS HOUSE I WILL". Is this a reference to Yoda?
Derek is still bare-chested until he is saved by Scott. He puts on a grey shirt and his leather jacket then.
They don´t like each other very much right now but there is some kind of a curious attraction.