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I'm giving WF-Channel a go for a doctor friend of mine.. And yeah, the thing isn't exactly the most obvious to understand...
I'm also trying to utilize it for my text file listings, and to wrap my links listing..
No-go so far.. hehehe
(I really like your theme, and if it comes to a choice between using that theme, and using WF-Channel, I'd keep the theme)
The "Default page" error has raised it's head for me as well..
It just isn't clearly stated the sequence needed to create new pages, or what limits to content there are...
Your issue is surely related to the size of the template.
One of these theme designers may have a fix for you.