Ah ha... I win!
Fix for negative tax with coupons:
Commented out lines 89-98 in /wp-content/plugins/wp-e-commerce/wpsc-taxes/controllers/taxes_controller.class.php as follows
// minus coupon tax if we are using coupons, but make sure the coupon is not a free shipping coupon
//if ($wpsc_cart->coupons_amount > 0 && ! $free_shipping){
//if ( $this->wpec_taxes_isincluded() )
//$coupon_tax = $this->wpec_taxes_calculate_tax($wpsc_cart->coupons_amount, $tax_rate['rate'], false);
//else
//$coupon_tax = $this->wpec_taxes_calculate_tax($wpsc_cart->coupons_amount, $tax_rate['rate']);
//$total_tax -= $coupon_tax;
//}
Fix for coupon not applying to all items of that type:
Added item quantity var to line 200, /wp-content/plugins/wp-e-commerce/wpsc-includes/coupons.class.php
$return += $item->discount*$item->quantity;