Yes, it was in one of the scenes where the staff were "dirty dancing" in their quarters.
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I actually like the Beatles version better than the original Isley Brothers.
It's a cover. See related answers for more info.
The band doing Twist & Shout was actually members of the group Highway 101. The drummer and lead guitar player / singer were there. The first lead singer of Highway 101 was not there however. Her name was Paulette Carlson.I've got some things about the movie at http://battlewang.net
Similar lyrics to these can be found in the song Twist and Shout by Deacon Blue.
i want to hold your hand, help, a hard day's night, Twist and Shout, I Saw Her Standing There, I Feel Fine , ....... the list goes on and on