Somewhere in this thread there are some posts about the postcount variable clashing with a variable from another hack. Since I never had the same problem you are having, I didn't pay much attention to it, sorry.
Let's start here...what version of vbulletin are you running? If you are running version 2.03 and up here is what you need to do. (If you've already done this, try it again and if it still doesn't work, let me know and we WILL get it working for you somehow.

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Code:
INSTALLATION INSTRUCTION FOR VERSIONS 2.0.3 AND UP
ok, how 'postbit' is parsed has changed since 2.0.3 so here's what you need to do to install this:
Originally posted by freddie
If you want a one file hack for this then do this:
find in showthread.php:
while ($post=$DB_site->fetch_array($posts) and $counter++<$perpage) {
Put this before it:
$postcount = ($pagenumber - 1 ) * $perpage;
Find in showthread.php:
$postbits .= getpostbit($post);
Put this before it:
$post[postcount] = ++$postcount;
Then put $post[postcount] in your postbit template.
save and upload.
Edit template postbit AND postbit_ignore and place the variable $post[postcount] where you want the post # to show.