Hi Dylan,
are you sure, you uploaded the correct zip-file? The xml-import-file is version 1.2.5, and after updating nothing has been changed.
And of course every registered user can see images in a hidden album!
Let me show you this issue in some screenshots. These are my albums:
Attachment 144453
The first album is public, the second is hidden.
So far, so good. For me as owner of the albums.
If now another user is watching the gallery, the hidden album itself is not showing, but the thumbnail is showing in the "Latest Images" block:
Attachment 144454
Of course it's possible for this user to click on the thumbnail and see the image in full size!
I'm sure this is not the way to use hidden albums, don't you think so?
Best regards
L.R.