Re: bbpress integration after BP upgrade
BuddyPress’s standard “forums” links are created with the assumption that BP is using the standard integrated version of bbPress. Since your installation is elsewhere, you’ll have to redirect those links. It should only be in one place:
In header.php of your BP theme, replace
<a href="<?php echo get_option('home') ?>/<?php echo BP_FORUMS_SLUG ?>" title="<?php _e( 'Forums', 'buddypress' ) ?>"><?php _e( 'Forums', 'buddypress' ) ?></a> with
<a href="http://www.australianracinggreyhound.com/forums/" title="<?php _e( 'Forums', 'buddypress' ) ?>"><?php _e( 'Forums', 'buddypress' ) ?></a>
As for your more general question, I faced the same issue with a project of mine (whether to maintain an external installation of bbPress or migrate over). I decided that, in the long run, it would be best to move to the standard, integrated version of bbPress. I described the process here: http://teleogistic.net/2009/12/upgrading-from-buddypress-1-0-to-1-1/
Not sure what’s causing your login issue, but it might be fixable by hardcoding the link into your theme’s header.php file. Replace
<?php echo site_url( 'wp-login.php' ) ?> with the correct path to the login page.