There are ways and means of upgrading the guestbook without losing your posts but make a back up of the SQL tables first to be safe. You will need to access your SQL database to restore the default username and password. The values can be found in the install.php file.
On the webdesign may I suggest you make the text in the left pane part of the link and not just the images and possibly less space between them. You could also style the scrollbars to better fit in with the site as well as making the frames borderless.
Q: How can I change the access rights (permissions) of files? A: If the FTP server supports the chmod command (unfortunately not supported by all servers), you can either use the function Files - Change attributes, or directly send the command through the command line, e.g. SITE chmod 755 test.cgi
I believe the text under the date is stored in the language file you have chosen which can be found in Lang folder. As for making the Sign the Guestbook image the link to sign it edit the relevant parts of templates/body.php.
You removed the image used as the link for posting comments but left the opening tag. You will find this in templates/entry.php just open it and do a search for comment, it should be the first result. If you didn't mean to remove it simply reupload the entry.php file.
Did you set the Base_url in the config file? At present it's making the image src as http://www.demboyz.org/scgi-bin/gb/guestbook/img/signing.gif as opposed to http://www.demboyz.org/scgi-bin/gb/img/signing.gif which is the true path.
Hmmmmmmm weird. Are you sure you followed the instructions precisely? www.carbonize.co.uk/verification.zip is the most upto date version of the script.