I'm not too sure why you used JUpdate to update to 2.5. I personally don't always trust 3rd party extensions to update the CMS as it sometimes causes problems. What you should do is (providing you have a backup of your old 1.6 site):
- Upgrade to 1.6.6 by downloading the patch and extracting it via FTP on to the root of your site
- IN the Joomla Backend, go to Extensions >> Extension Manager >> Find Updates
If you can't find any updates, then go to Options and select the Long Term Release. Once saved, Purge Cache and try to find updates again.
Update:
change this:
<?php if($this->params->get('showComponent')) : ?>
<jdoc:include type="component" />
<?php endif; ?>
to this:
<jdoc:include type="component" />
So basically remove the PHP that is wrapped around