Bump, noticed something else too. The form action url is incorrect, see below:
<form id="MemberLoginForm_LoginForm" action="Security/LoginForm" method="post" enctype="application/x-www-form-urlencoded">
This causes it to try to find the form processor at http://domain.com/Security/Security/LoginForm. Theoretically, this is why it trips the template error too. So the solution seems to be to fix this incorrect form action.
Any ideas on how to fix this??