They do say the first movie is the definite finale and therefore takes place after the second one. My theory is that Sponge Out Of Water takes place before Season 4. Assuming the book made the Bikini Bottomites descend into savagery because Burgerbeard wrote it in, it would appear that some corrupting influence endured, causing the characters to slowly but surely Flanderize, until SpongeBob's transformation at the climax of the first movie.
I know they don't take place in the order they're released; that's why I stated that the first SpongeBob movie is the definite finale.
If you're referring to the seaweed moustache, it doesn't appear in the movie. In fact, the song it appears in (Thank Gosh It's Monday) is not in the film at all...or at least not in the version I saw in theaters.
I think the thing to remember is the series isn't a drama meant to be taken seriously. It's a child's television show essentially (which appeals to an Adult audience as well of course).
Whilst Stephen Hillenburg may have stated the first movie was the end, which it most probably was, there's still nothing stopping them adding references to the movie in later episodes. There is no set chronology is the series.
That's why I'm not a fan of saying "this episode happened before this one" because each episode is independent.
There is no set chronology thus each episode or movie can pick and choose from whatever episode they want.