Never seen someone supply so much information before...perfect...will make it a bit easier(hopefully), to find the error.

What I can see now is that you are missing the display.phtml and index.pthml file.

Inside the "include" directory create a directory with the name "views" in that folder create a folder with the name "scripts". In the "scripts" folder create two folders with the name "index" and "news".

Within the "index" directory create the file "index.phtml" and in the "news" directory create "default.phtml" and "index.phtml"

All the above is the get the Zend Framework to work properly...I have never used the smarty template so can't say anything about that. You can find the proper directory structure here.

Summary
What I'm trying to explain above is that in your "views/scripts" folder, you will need a folder for each controller you have. If you have a FooController, you will need a "foo" directory in the "views/scripts" folder. If you have a BarController you will need a folder named "bar" in the "views/scripts" folder.

Now let's take it a step further. For each Action in your Controllers you will need a .phtml (php+html, non-official filextension, just commonly used). With the actions name, indexAction will need a index.phtml and your displayAction will require a display.phtml in the correct directory.