Yes, Mustafa is doing an amazing job with Kloxo. However, I am a developer of web solutions, NOT server administrator - and for that my frustration is sometimes my own (meaning I am mad at myself for not knowing the answers, or being able to find them).
With that said - Kloxo not only effects you, it effects every client you have on the machine. When releasing an update, it should be solid. I made a mistake by updating a production server. I WILL NOT make that mistake again.
If you were able to fix yours why not share solution? The solution had nothing to do with making a directory but how bind listens to localhost. I understood this - but could not understand how to fix it. FUNNY thing is, the fix was to comment out the entire line to bind it to 127.0.0.1 - atleast that is Mustafa's fix.
Yes, Kloxo is free and open source. I have no problem donating alittle money here and there - and will continue to. If I was making a decent amount (right now I am breaking even on server costs) I would do more - and I will when I can.
PLUS

I had no sleep for two days!

Have a good day... and Mustafa -- THANK YOU