HI,
I take it you are no longer on OS X 10.7.2 ?
The display of Names (and/or Pics) in Buddy Lists and the main Messages window (when in a Chat) in Mountain Lion is controlled from the View Menu > Buddy Names.
To set this choice the window has to be the "Front" one.
So the Messages window (CMD + 0 in the window Menu) gets brought to the Front when any sort of Text Chat is going On.
the View Menu > Buddy Names items is selected and navigation to the choice you want.
Full names is the First name, Last name as seen in the Contacts app (Formerly the Address Book)
Short Names are Nicknames (normally set via Messages) or First name only if no Nickname exists.
Handle is the Screen Names (If AIM), Jabber ID (If Facebook, GoogleTalk or other Jabber ID) or in the case of iMessages the current contact ID or iPhone number.
You can do the same to any Buddy list that you also display.
It can be used in Conjunction with the View Menu > Messages which has options to display Pics, Names or Pics and Names.
(Names now refers to whatever is set in the "Buddy Names" option).
8:49 PM Friday; November 16, 2012
Please, if posting Logs, do not post any Log info after the line "Binary Images for iChat"
iMac 2.5Ghz 5i 2011 (Mountain Lion 10.8.2)
G4/1GhzDual MDD (Leopard 10.5.8)
MacBookPro 2Gb (Snow Leopard 10.6.8)
Mac OS X (10.6.8),
Couple of iPhones and an iPad
"Limit the Logs to the Bits above Binary Images." No, Seriously