It occurs when the stone is double clicked during game setup and one of the two players is null. I fixed it in 1.2.3, thank you for reporting it.
Eddie, that's surely possible to do. However I don't have plans on doing it myself for now, and I personally think that the 'battles' look good enough with just the effects and sounds. Making the pieces battle each other, would just slow the game further... and you know chess isn't a fast paced game on its own
Either way if you or someone else wish to implement this, I'll be happy to merge it into the script with a flag (and credit of course). Otherwise I might end up doing it when I have a little time