Rob, the drop targets have a switch or opto to recognise when they have been hit down. I would check this switch / opto to make sure it is working. Also, check that it is plugged in - you said that you stripped the playfield, and some of the parts have plugs to make them easy to remove.
As for the LED's, the Pinball2000 has circuitry to sense the current going through the lamps. As LED's use far less current than an standard bulb, they will be reported as being faulty.
