Hey you just opened the plugin's tag on WordPress Answers :D
Can you paste the code of the generated html? From what you describe, you are using it correctly, so I just want to see if the template is being loaded to detect if the problem is on the template side, or a bug on the plugin's code.
UPDATE: Ok, I checked your template on a new WordPress install. It was getting the template, but there was some code error, here's what worked for me:
I created the list-category-posts folder under wp-content/themes/twentyten and added a new php file called "lcp_template_1.php" with your code. Then created a new post with:
[catlist template=lcp_template_1]
Now, I started editing your template, I fixed the Show Category code and it's currently working with this code:
<?php
/*
Plugin Info & license stuff...
*/
$lcp_output = '';
//Show category?
if ($atts['catlink'] == 'yes'){
$cat_link = get_category_link($lcp_category_id);
$cat_title = get_cat_name($lcp_category_id);
$lcp_output = '<div class="topic-heading"><a href="' . $cat_link . '" title="' . $cat_title . '">' . $cat_title . '</a></div>';
}
$lcp_output .= '<div class="post">';//For default ul
//Posts loop:
foreach($catposts as $single):
$lcp_output .= '<h2 class="entry-title"><a href="' . get_permalink($single->ID) . '">' . $single->post_title . '</a></h2>';
//Show comments?
if($atts['comments'] == yes){
$lcp_output .= ' (' . $single->comment_count . ')';
}
//Style for date:
if($atts['date']=='yes'){
$lcp_output .= ' <div class="entry-meta"> ' . get_the_time($atts['dateformat'], $single) . '</div>';
}
//Show author?
if($atts['author']=='yes'){
$lcp_userdata = get_userdata($single->post_author);
$lcp_output .=' <div class="entry-meta">' .$lcp_userdata->display_name . '</div>';
}
//Show thumbnail?
if($atts['thumbnail']=='yes'){
$lcp_output .= '<div class="lcp_thumbnail"><a href="' . get_permalink($single->ID) . '">' . get_the_post_thumbnail($single->ID, array('40','40')) .'</a></div>';
}
//Show content?
if($atts['content']=='yes' && $single->post_content){
$lcpcontent = apply_filters('the_content', $single->post_content); // added to parse shortcodes
$lcpcontent = str_replace(']]>', ']]>', $lcpcontent); // added to parse shortcodes
$lcp_output .= '<p>' . $lcpcontent . '</p>'; // line tweaked to output filtered content
}
//Show excerpt?
if($atts['excerpt']=='yes' && !($atts['content']=='yes' && $single->post_content) ){
$lcp_output .= lcp_excerpt($single);
}
endforeach;
$lcp_output .= '</div>';
?>
Please let me know if this works for you. I should update the default template since the show category code is old and buggy. Will be done for next version.
UPDATE: 0.15.1 includes a fix for the undeclared lcp_output variable. Also, regarding the thumbnail not displaying, please make sure you've modified the theme according to the get_the_post_thumbnail documentation.
To enable post thumbnails, the current
theme must include add_theme_support(
'post-thumbnails' ); in its
functions.php file. add_theme_support(
'post-thumbnails' ); must be called
before the init hook is fired. That
means it needs to be placed directly
into functions.php or within a
function attached to the
after_setup_theme hook.
SOLVED:
As we found out on the comments, the problem was with using STYLESHEETPATH instead of TEMPLATEPATH. This change will be included on the next release. Thanks Das for the feedback :D