Your basic problem is this
QuoteNot able to update VM to newer version (Nor Extension Manager or FTP worksm calls for "session timeout" of some kind)
You need to update and if your timing out (did you ftp e.g. the com_virtuemart.2.6.8.zip to a folder under tmp and try installing from there?)
If it won't then your host will need to help you
After that you can look at the other problems
(I assume usefancy is related to the facebox/fancybox choice for the images in product details - but who knows till you get 2.6.8 installed)
Assume your doing this on a clone of the site?