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We have changed direction and are going back to employing the captcha feature by using the core code captcha functionality instead of creating a local copy of the captcha class. The local copy of the class caused too many issues for those who are using XOOPS 2.3.x
The downside to this change is captcha will not be available to those using older versions of XOOPS. However, I believe this change is better for further module development.
Made some more progress today adding wordwrap functionality to the module class so the displayed text line length can be tailored to match the width of the shout frame, thereby eliminating the horizontal scroll. If a word is longer than the width of the shoutframe it will be split between lines so long url's or spammer crap will not change the width of the block.
I also noticed that several people are using the shoutbox in the left or right column which is very narrow so I am going to make the display of avatars in the shout block optional through a preferences parameter.