The Pretty Moppet idea is that around the time Spike was growing up, he has a cliched forbidden romance with a daughter of a noble family.  The girl is the younger of a set of twins called Ariadne (the elder) and Persephone (the younger).
When Spike is turned by Angelus, Persephone is called to be a Slayer.  Persephone turns into an ace Slayer and Spike is
lost to her until one day, their paths cross in a "take over the world" kind of scheme and she dies, but not by his hand.

Against the force of Slayer nature, Ariadne is called as the next Slayer, but is turned by a guilt-ridden Spike because he that he can replace Persephone with Ariadne (since they're twins, anyway).  However, Ariadne turns out to be the vampire from hell *literally* because of some insanity thing and the fact that she's a Slayer.

Ariadne goes on to make Spike's life hell for a bit because she was jealous of his human relationship with her younger sister.  For some reason, she disappears after a while and that's when Spike rejoins Angelus and Dru.

In short ... Pretty Moppet is Ariadne, a Slayer turned Slayee sired by Spike - a misguided attempt to retain a lost love.  She's insane and she's bent on tormenting Spike for loving her sister and not her.