If you look, each block has two <if>'s, but only 1 </if>
Code:
<if condition="$forum[sponsor_banner] != ''">
<a href="$forum[sponsor_url]" target="_blank">
<if condition="$forum[sponsor_flash] == 1">
<object classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=7,0,19,0">
<param name="movie" value="$forum[sponsor_banner]">
<param name="quality" value="high">
<embed src="$forum[sponsor_banner]" quality="high" pluginspage="http://www.macromedia.com/go/getflashplayer" type="application/x-shockwave-flash"></embed>
</object>
</if> <<< Either this is missing <<<<
<else />
<img height="60" width="120" src="$forum[sponsor_banner]" border="0" /></a>
</if>
</if> <<< Or this is missing <<<<