Widget trouble with Social and EDU Blog theme

I am having a widget issue problem with the EDU Blog theme. I also had it before with Social theme. The problem is that when I try to add the top section of the widgets, instead of picking the widget up in it's aprox image size of (0.5 inchH x 2 inchL) It shows a long grey bar (that spans the width of my dashboard) and it does not fit in. (It just does not want to be dropped in the correct widget box to the right (I can only pick it up but can't place it). However some widgets I can put in especialy the bottom ones from the main widget page (inactive).

I also had this problem before on my other site last month with the social theme, but the widgets work with the Blog MU theme.

Is their also a way to showcase groups and/or blogs on the front page. The current site that I am having the issues with is "Doylestown(DOT)us".

Many thanks