I tried after a longer while to generate a new picture show. All preferences of my last use are still hooked but I cannot choose a specific template. Template shown in the box was a test and removed in the meantime
My Mac is a iMac 2.92 Intel Core Duo with 4 GB DDR3 memory and OS X 10.8.1
Galerie development stopped five year ago. The latest release version was intended to work with MacOSX 10.4 (Tiger). There was one beta that was intended to solve an issue with MacOSX 10.5 (Leopard). You can expect Galerie to stop working at some point with newer versions of OSX and/or iPhoto and other image browsers.
In OSX 10.8 it appears that, indeed, you cannot choose templates from the popup menu in the main window. You can, however, still choose templates from the Templates window (Window menu > Templates, or command-T).
I have all the templates installed (collections 1-8 and Seasons and events) and used the "Grey minimal" template.
At first I also thought that I could not choose a template, but then I realized that you have to click on the drop-down menu, and then wait something like at least 20-30 seconds, and THEN you get to see the menu items.