You should remove this part:
<?php if ( (function_exists('has_post_thumbnail')) && (has_post_thumbnail()) ) { ?>
<div class="widget-img">
<a href="<?php the_permalink(); ?>" rel="bookmark" title="<?php the_title(); ?>"><?php the_post_thumbnail('lists'); ?></a>
</div><!--widget-img-->
<?php } ?>
.
Just to explain... This conditional statement askes... if there is a thumbnail run the code in between me and my closing tag...
<?php if ( (function_exists('has_post_thumbnail')) && (has_post_thumbnail()) ) { ?>
<?php } ?>
This part "echoes" the thumbnail container (div) & its href wrapper & the thumbnail itself.
<div class="widget-img">
<a href="<?php the_permalink(); ?>" rel="bookmark" title="<?php the_title(); ?>"><?php the_post_thumbnail('lists'); ?></a>
</div><!--widget-img-->
i just want to add that this is not a wordpress question and should be asked in the proper forum next time... this is more a php question.
Best of luck, Sagive.
