This extension sizes images based on how they're arranged in the post's markup. When an image is inline with other text, then it is small on purpose. The fact that the lightbox isn't working is a known issue I'll have patched in 0.3-beta
You could work around it currently by making sure images are separated from text by at least two returns. (One return isn't considered a paragraph break.) For example:
Or you could use BBCode or Markdown with your images. This bug is more particular to fof/formatter.
I anticipate having 0.3-beta with a patch for this in the next couple of weeks.