I've been looking everywhere for this fic and can't seem to find it. I remember that Buffy and Spike were both captured by the Initiative, and they were made to fight a bunch of demons together to survive. They broke off demon horns and such to use as weapons, and would wash off the demon guts when the initiative people would spray down the 'arena' area. Random details, but that's what I remember!

OK, so I cannot sit here and do nothing 'cause I got totally hooked up on finding fics for myself ans others.
That description makes me think of quite a bunch of stories, I think you should research with the keyword Initiative in the forum, maybe one of the threads will trigger your memory... (Sorry if you already thought of that one.)
Do you remember the website where you read that story, which year (approximately)? That would help a lot.
Maybe look into Kari Mouke's fics they're offline but some can be found here and here

There a plenty of Initiative fics around. Two that come to my mind are Dreamer by Gort and Slayer Rising by Sigyn. At least one of them (maybe even both, I don't quite remember) have fights in an Arena and subsequently cleaning with water.

As Hannora said, if you search the found fics category or the fic recall category on this forum you will come up with many fics. Maybe going through all the titles will ring a bell?

flow

flow
It's totally Slayer Rising by Sign, thank you so much!! For some reason it escaped my brain that it was a Vamp!buffy fic. You're my hero!