Difficult to tell, but I think you may have chosen Make Changes in jAlbum, which will not make the thumbnails again. The thumbnails in your output directory are all still a fixed shape. Just click Make Album.
Found it. You must have been experimenting with another skin, and it left something behind that shouldn't be there. Go to Album > Settings > Advanced > User Variables and delete everything you see there. Those settings are overriding the Pluto settings.