Try taking the conditions out and see what you get. So try just:
HTML Code:
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<tr valign="top">
<td class="smallfont"><a href="newreply.php?$session[sessionurl]do=newreply&noquote=1&p=$LASTPOSTID" rel="nofollow"><if condition="$show['closethread']"><img src="$stylevar[imgdir_button]/reply.gif" alt="$vbphrase[reply]" border="0" /><else /><img src="$stylevar[imgdir_button]/threadclosed.gif" alt="$vbphrase[closed_thread]" border="0" /></a></td>
<td class="smallfont"><a href="newthread.php?$session[sessionurl]do=newthread&f=$foruminfo[forumid]" rel="nofollow"><img src="$stylevar[imgdir_button]/newthread.gif" alt="$vbphrase[post_new_thread]" border="0" /></a></td>
</tr>
</table>