You don’t have to disable it, but … for security reasons, you want to give potential hackers as litle information about your site as possible.
I am not aware of any direct security risk.

You’re welcome. Thanks for the feedback.

You’re welcome and thanks for the comment.

Thaks for the information. Again, since I don’t have Artisteer, can’t offer any help.
I still don’t see why Artisteer should have problems – unless it is creating really funky template code that strays well outside of normal Joomla! template design.
Try changing your browser. Various browsers have different problems with Joomla! 1.7. Please note that Chrome, FireFox, Flock, Mozilla are all based on the same engine (it is possible they all behave differently with Joomla!, but I’m not testing it out), so your different browser options are: (1) Internet Explorer, (2) Chrome / FireFox, or (3) Opera.
In my reply to Kerry, I gave two links which discuss broweser issues with Joomla! 1.7.

I get the same as Kerry, also my main menu is not working, wonder if Artisteer has ‘1.7 issues.’

You’re welcome and thanks for the feedback.

The instructions are not that difficult. I would suggest trying them again, ensuring you go step by step. Ensure you save at the appropriate points – it does not good to change a setting and then leave the page without saving the changes.
Since I am unable to download rt_syndicate_j16, I can’t test it out on my machine.
As well, I would imagine you should be using the j17 version – since, from what I understand, j16 is for joomla 1.6.
Since I can’t test out the theme, it is possible that it completely bypasses joomla’s normal way fo handling things and handles module positions without going through joomla.