Ok.
I can sucessfully re-create the error by doing the following:
open up 2 tabs, both logged into wJ (one must be on the index). In the other tab, logout. Go back to the first tab, upon the ajax refresh, kablamo, shoutbox fucks up. This is essentially what happens when a user is banned, they are, for all intent and purposes, logged out of the chatbox.
I think its because the user is denied access to the shouts, but is still given access to the smilies. I hazard a guess that if you extend the "if banned" logic to include the smilies, it should be solved.
I've also managed to make it prettier; ammending the element.style from 100% to 590px.
[slide]http://www.imgcentre.com/img/uploads/big/5cd1216511.png[/slide]
Cant really get any further without getting my hands dirty.