Shoutbox not working for members and can't upgrade 7.0.4 to 7.0.5

I have two problems I hope folks can help me with.

1. The shoutbox will let visitors post comments, but if you're logged in as a member, the text area is very small and there's no way to enter comments. This happens in both IE and Firefox. The site is http://shanghaivictoryriders.com/. I've uninstalled and reinstalled the module but can't work out why visitors can post and members can't. The block is 'visible' to both members and guests.
2. I figured it was a good excuse to upgrade from 7.0.4 to 7.0.5, and after backing everything up and overwriting files, when I run the upgrade (http://shanghaivictoryriders.com/upgrade/) I get a "Update can not be applied" error.

Any suggestions?

Thanks!