WordPress Widget Trouble

Good afternoon,

My setup:
WordPress 2.9.1
Atahualpa 3.4.5
Apache version 2.2.14 (Unix)
PHP version 5.2.11
MySQL version 5.1.42
My hosting service is Bluehost.

Whenever I add a Widget from Appearance > Widgets to any of the sidebar areas it will add those Widgets but removes all of the standard Atahualpa Widgets.
I've tried a variety of Widgets, stock and downloaded.

I'm sure I have probably just overlooked something in the documentation but for the life of me I can't find it.
Any suggestions you might have would be greatly appreciated

Thank you!