True - the logic for checking these is definitely in need of review. Bring it 
up on the list and let's discuss it.

Okay, Steve here is what I'm getting now:

I've added to my blogroll (on that new 2.3.1 WP install)
  Name: James D Kirk
  Address: http://jamesdkirk.com (which happens to be my OpenID URL as
well)
  Description: My home page

  XFN: rel=me

On the WP-Contacts List Plugin Options page:

If I select the "Username links to blog (No OpenID)", this is the code
behind the output on the static page I created:

<a class="url fn" rel="me" href="">James D Kirk</a>

Clearly, nothing is passing to the href field.

If I select the "Username links to blog or openid (if user registered
via OpenID)", this is the code output:

<a class="url fn openid" rel="me" href="%20">James D Kirk</a>

This time a "space" is attempted to be passed.

Finally, when I choose "Username links to openid if user registered
via OpenID, blogname links to their blog":

<li class="vcard"><a class="url fn openid" rel="me" href="">James D
Kirk</a> -- <a class="url" href="http://jamesdkirk.com" rel="me">My
home page</a></li>

Also, you mentioned earlier about the images (and styles?) not
outputting. I'm not seeing anything in the way of imagery being output
via CSS here, and I believe I have the file structure correct in the
plugin's directory:

wp-diso-contactlist (plugin folder)
  wp-diso-contactlist.php
  README.txt
  /images/
    openid.gif
    /xfnicons/
      7 "xfn-....png" images
  /styles/
    friendlist.css

Let me know what the next tasks are, Steve. At your service!

James.

I found the problem (maybe) default was echoing the unset variable 
$contact_blog_link
instead of $the_link

as a fix:

      $the_link           = wp_specialchars($row->link_url);
+      $contact_blog_link  = wp_specialchars($row->link_url);