Does anyone remember which episode of Sherlock the Christmas party, with Molly, was in?

That's the one with Irene Adler in it also...So, I think it would be "A Scandal in Belgravia".

It was A SCANDAL IN BELGRAVIA (S2E1).

Sherlock did not make a wrong deduction. Molly did have a crush on him. He correctly matched the neatness and red of the wrapping with Molly's lip colour. It was this incidence that helped him deduce that Irene Adler had feelings for him too (and she whipped him like the corpse in A Study In Pink.). He later confirmed this by taking her pulse and watching pupil dilation.