Pastebin is just some sort of sites where people put their codes for display, and then others could see it (to get it fixed, or checked, etc). It's like sharing photo, but instead of photo, it's code. :) I'm not too good with English so my explanations perhaps won't be too clear, but I hope it's still understandable...
Okay, regarding your code...
It seems there is nothing wrong with the loop.php, but the functions.php seems pretty messed up. Since the tags are converted, thus making it unreadable...
I'm not too sure, but perhaps it is caused by the text editor you are using. What text editor are you using? I'd suggest you use (if you haven't) something like Notepad++, if you're on Windows, so the codes wouldn't get messed up when you copy-pasted it from the web.
Anyway, try replacing your function twentyten_posted_on() with this one: http://pastebin.com/ZapJgmye Try to copy from the RAW Paste Data box.