It took place before Buffy came to Sunnydale.
I believe Jesse dared Xander to spend a night in a supposedly haunted house. Xander takes his sleeping bag with him and settles in. It then turns out that Spike was also spending the night in the house. At first Xander thinks Spike is a ghost. Spike then seduces Xander, and after having spent the night together leaves him alive.
Anyway that's what I remember. Hope someone has heard about it.