WP Gallery and Atahualpa?

This might be one of those "it's a Wordpress issue, not the theme" posts, and if so, I'm sorry. But I can't figure something out. I'm using Atahualpa 3.4.4. I have never been able to get the built-in WP gallery function to work the way I see it working on other sites. Basically, the images are too small, even if I change the Settings/Media thumbnail size to 300px. And if you click on an image, the resulting image isn't full-size, even though I set the images to 500px wide. They show up as 400px once you click on the thumbnail.

And I'm not getting the lightbox effect, but maybe that only works with a plugin?

Also, I would rather just have, say, 2 columns of images show up at the size I choose, not thumbnails. I can't figure out whether or not there is some setting in the theme's image handling that is making the gallery not work as I want.

http://www.larchmontgazette.com/news/testing-gallery/