Hi Tim,
There are quite a few changes from 1.07 to 1.0.12 ...
Its not impossible to update but definitely make a copy before you do so.
In particular the superfish was updated, some new css styling was added and a few cross browser fixes with the slideshow
module were addresses.
I guess if you havent changed the index file then it will be a clean swap with that plus all other files minus the template_css.css file.
From the looks of it the body background, height of the slideshow and the top area have been changed.
I would just try to work backwards with it or add the rules that you know you changed to the bottom of the template_css file ... that will mean that they have priority and then you can remove step by step what you dont need. A pain I know but worth it I think.
Im going to look around for the login issue ...