Activation problems

I woke up this morning to see my site was messed up saying I had removed the footer code. I checked and it was still in bottom.php or footer.php and I don't remember removing it. So I tried to do the right thing here. I hand edited the footer widget and placed the code in there then I went and bought the theme. It's a really nice theme and serves my site well.

Then come the activation problems.
1. You are not allowed to use "localhost". This is a problem. Why not? I get the unsettling feeling that SMT is using this to log in and place an activation file on the server. I cannot confirm this and I would definitely like a well written explanation for this.

2. It never activates. I gave it a try and no matter what I do, the activation code will not work. The activate button presents me with some FTP info boxes. I enter the FTP info and it says "processing" then does nothing.

3. I have emailed support twice today with no response. If I had less knowledge of the inner workings of wordpress, my site would probably have been down all day. It's 4:42pm EST now and I have yet to even get a reply to any of my support emails.

This kind of support is atrocious. If I do not get a solution or reply to this by tomorrow morning, my next call is my bank to reverse charges unless I am given an option for a full refund. It's unacceptable to pay for a product and then have no support after payment claims to enable that feature.

By the AM, I want a response with a solution or at the least I want to start a dialogue with someone in support. I need someone to look into this at a non first level support instance.

If you have any problems with activation, please contact us via support@smthemes.com. In most of cases we need personal information, order numbers and activation keys to help with activation.
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Activation problems will not be solved via forum.