You forgot to copy the .png files from the gfx directory (blue-h.png etc) to your web server, or put them in the wrong location. If you right-click on the numbers, and select "View Image", you will most likely see a 404 error message. Put the .png files in that location.

Alternatively, you can use <set PicLocation="gfx/"> to set other path.

No. Pisg will only read log files that some other program has written. Pick an IRC client or bot from the list of supported formats.