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Why is my widget totally stretched out, or displaying at the very bottom of my sidebar?

This is an issue with the CSS for your blog, and our widget. To compensate, we added the float option in settings. Try floating the widget to the right (or left) and that should fix it.

What about the K2 theme?

Good question, we're in the process of testing on K2. Please let us know about your experience at: support [at] adaptiveblue.com

As of now, you must disable the Sidebar Manager. You can do this by going to 'Presentation'/'K2 Options' and making sure the 'Enable K2's Sidebar Manager' box is unchecked. Click 'Update Options', and you're good to go!