Sorry, not possible, at least not yet. What do you mean the images aren’t clickable?
When I click “Set custom image for this post,” a gallery of the images I have uploaded comes up, but I am unable to select one as the custom image.
You mean the pop-up opens and when you click on images nothing happens? Sorry for the dumb questions but I’m trying to understand what exactly is happening.
Do you use firebug? You see any js errors or anything? This feature should work, tested all wp versions and it’s not a problem in any of them. If you can’t debug for yourself, I would need access to your blog admin to see what is happening. If giving temporary access is not a problem, please contact me on my blog and we’ll continue this by e-mail.
I agree with kbenker in that this plugin should have the option to display the featured image. I use the ideal theme from fthemes.com that does this automatically. It doesn’t give me much option for customization though.