Solved — forgot to include wp_head() and wp_footer(). Hope this helps someone else.
Adjusting the img margins (I removed all of them) did change the spacing of the thumbnails, but they still appear as a single column, and the Flash lightbox effect is still non-functional.
By the way, here is a link to the main stylesheet for further reference:
http://intranet.justintoon.com/wp-content/themes/kellytoon_new/style.css
