Could it be your fret setup? If the string is touching more then one contact, that's your problem.
Please post pictures!! I don't even know what it looks like!!!
EDIT: Hey, at least give me SOME credit on your blog!!
EDIT2: Well it seems there are pictures on your blog. That string is going to be really hard to press! The contacts are so recessed! I hope you already play a real guitar and calluses because if not, that's going to HURT!
EDIT again:
After going over your pictures, I have some questions. The ribbon cable on the top of the board, it has 8 wires right? I assume they are for Frets 1, 2, 3, 4, 5, Strum up, strum down, and ground? Are they? If they are, this should be a lot easier then it is.
Did you already put a post for the string? FYI, I used two hookeyes (screweyes?). The one on the neck turns to tighten the string.
Also, I suggest using actual guitar string. The thickness is up to you.
I think your problem is that the ground from the strum bar, isn't the same "ground" as the fret board. In which case, I sure hope someone responds to this topic:
http://forums.benheck.com/viewtopic.php?p=265828#265828
If you're looking at this post and it was made before 2008, just ignore it.