Why did you make a template for the blog? The one you made doesn't seem any different to the one that is already set up for the theme. You could just use that one.
Also I am seeing 1 slider, 6 fullsize posts and 3 half sized posts. The 4th half sized post is on page two because it is being displaced. The half sized posts should be next to each other. This doesnt match the settings you said above so you have some kind of conflict there.
I think your problem with the pages might be the settings for the homepage.
In the Shoutbox/Theme Options panel in the dashboard (down the left hand side) you can set the homepage and the news (blog) page. The Shoutbox/Theme Options/Main News page option lets you set the blog format so you can choose which kind of posts you want to appear there.
Also in the dashboard is the Settings panel where you also specify the homepage and blog page for Word Press.
In Settings/Reading set frontpage to Latest posts.
I'm not sure why your half sized posts are appearing in a single column. Check the blog settings in your template again. Otherwise it could be a bug with your version of Shoutbox and the new Word Press. I don't know which versions you are using of each. You could also switch off your plugins and see if anything changes. The other thing it might be is if you changed the size or displacement (padding or margin) of the half sized posts in your css. If they are not the right size to fit side by side that might explain why they are being displaced downwards.
Hope that helps. It's hard to be more specific without being able to get into your site.