[Lynne]

You realize you opened the condition on line 2 and closed it on line 3 with nothing in it? And then you did that again?

You probably want something like this (not tested - you will have to test it):

<if condition="$prepared['userid'] != '1'">
                <!-- current activity -->
                <if condition="$prepared['lastactivitydate'] OR $prepared['action']">
                    <div class="alt2 smallfont block_row" id="activity_info">
                        <if condition="$prepared['lastactivitydate']">
                            <div id="last_online">
                                <span class="shade">$vbphrase[last_activity]:</span> $prepared[lastactivitydate]<if condition="!$show['detailedtime']"> <span class="time">$prepared[lastactivitytime]</span></if>
                            </div>
                        </if>
                        <if condition="$prepared['action']">
                            <span class="shade">$vbphrase[current_activity]:</span> $prepared[action] $prepared[where]
                        </if>
                    </div>
                </if>
                <!-- / current activity -->
</if>

That shows the current activity of everyone's profile except userid 1. If that give an error, combine the first two conditions into one.