Regardless of weather I am logged in as webmaster or another group I CAN NOT view member accounts. This means that visitors can't pm eachother or anything.

I have the correct rights turned on in blocks and groups, but it's just now working.

When you click on "Members" or "View Account" or the username of a particular member (from a post) - this is the error message (with php dibug on):
This page cannot be displayed due to an internal error.

If you are the administrator of this site, please visit the XOOPS Troubleshooting Page for assistance.

Notice [PHP]: Undefined index: xoops_lblocks in file class/smarty/Smarty.class.php line 626
Notice [PHP]: Undefined index: xoops_rblocks in file class/smarty/Smarty.class.php line 626
Notice [PHP]: Undefined index: modules in file class/smarty/Smarty.class.php line 626
Error [Xoops]: Smarty: [in db:system_userinfo.html line 112]: syntax error: expecting '=' after attribute name 'ts' (Smarty_Compiler.class.php, line 1375) in file class/smarty/Smarty_Compiler.class.php line 1824

Looks to me like the compiler is reporting a syntax error in system_userinfo.html around line 112.

The "Notice [PHP]: Undefined index: xoops_lblocks in file " are nothing to worry about I am told

Try updating your "System" files in "Modules"

Templates are located under system/templates.

If no luck go to Templates (your default template has a tick against it) Look for "System" files, and click on "List", you will find system_userinfo.html in there. Click on "Edit"

Are you using the default template? You can not edit the default template, but you can clone it, and then edit it. Call it anything you like and make the clone your default template in general settings.

There is a bit in the wiki about templates and themes. You could practice by uploading the x2t theme, and then the "tar" file in the extras folder to make a new template, make this template the default in general settings, and then check if you have the same fault.