Desperate; Login not working - RECONNECT loop?

I don't think you are. I'll take it one step at a time:
1) Good
2) This is normal IF you're logging in through Joomla.. not with your Facebook credentials. The "Reconnect" button is letting the user also login with Facebook, in which case, if they do, they can then later log into the site with either their Joomla account, or their Facebook account. Also, being logged in by Facebook makes it easier to comment or do other things that require the user to be logged into Facebook.
IF you're seeing that message after you've logged into your site with Facebook, that's wrong. I just logged in with JFBConnect/Facebook, and everything seemed right though.
Finally, if you want to disable the Reconnect button, you can turn it off in the JFBCLogin paramters.
3) Are you logged in with Facebook? If you log in with your Joomla account (on this page: www.inewslocal.com/index.php?option=com_...iew=login&Itemid=155), you won't be logged in with Facebook.. which won't let you comment. Not sure why the login button on the comment box doesn't work. Can you give a page with comments on it for us to test?
4) Check the redirection URLs in both the JFBConnect main component configuration and in the JFBCLogin to make sure they're setup how you want. If that doesn't point out any issues, let us know and we'll figure that problem out too!

Good luck!

Glad disabling the 404 plugin you were using fixed the logout problem.

As for the login issue, when I login, I see my correct avatar and do not see the reconnect button. Additionally, the comment box appears fine for me (I'm logged into Facebook already). Can you give me more information about what browser your using or any other information you might have about how your recreating this? Additionally, can you try re-registering from a different Facebook account, creating a new user, and see if the same occurs with that account?

Unfortunately, since we can't recreate it, it makes it obviously makes it harder for us to fix the issue. We'll get to the bottom of it though!

I just re-registered on your site and was taken to the following page after creating a new user account (username: testscfb):
www.inewslocal.com/index.php?option=com_...&id=10428&Itemid=250

Does that page seem like the correct redirect? This was using IE8, not in compatibility mode.

When I login using the same account, I'm successfully logged in, and remain on the same page (looks like returning user redirection is turned off).

In all, this seems like it's working right for us. Can you let us know (or try):
* If you ever had a much older version of JFBConnect (2.x) installed on your site?
* Using a different Facebook account?
* Using a different computer altogether?

At this point, I think we'd need super admin access to your site to try to investigate further. Again, since we can't recreate it, it's very difficult to narrow down the problem.

I just updated a few settings in JFBConnect, but I'm not sure if it will make a difference.

You have CB installed, and set to require email activation. However, in JFBConnect, you're not using the CB integration. I've enabled the CB integration and told it to bypass the activation requirement. I've disabled any of the profile import capabilities though, so you shouldn't see any major difference with these changes.

To test, you'll need to use a 'new' account (since we only activate the user in CB on new user registration). You can either delete the users that you created previously (if you can), or use new Facebook accounts. Alternatively, in CB, if you find those users, you'll see that they haven't been approved or confirmed, which I think is the problem. If you approve and confirm them, that may allow those users to log in.

Again, I can't recreate this issue for some reason, so you'll have to report what you find. JFBConnect is setup fine, but you have a lot of extensions, so it's possible there's something conflicting there that we're not aware of. Additionally, you're using a quite old version of Joomla. There aren't any major security vulnerabilities since that release, but upgrading is always recommended. We don't test with versions that old either, but don't know of anything that should break because of it.

Good luck, and keep us posted on anything you find. If you have questions about the above, don't hesitate to ask.