Here's my comments based on flying Lan a couple of times a month:

All in all, they run a very good operation, notwithstanding Oz's issues. I'd say their 767 is the most comfortable coach class I've been on, bar none. Food is decent, schedule is reliable, entertainment is OK (if you can fly business or first, you'll experience some of the best seats and service available anywhere).

As to the lack of movies and music on the 737's...that's the way it is. In fact, I can't think of many 737's anywhere with inflight entertaiment (Varig comes to mind). Lan flies 737's domestically and on some international routes (La Paz, a couple of runs to Buenos Aires, and, of course, the Falklands). Good news is that Lan is taking delivery of A320's as we speak, which include movies and music. They will be replacing the 37's. I flew one last week, and it was fine. They are also introducing A340's, but I prefer the 767, inflight video games notwithstanding.

To Oz's specific problems, I can't comment. All airlines have bad days, and maybe you picked them (think of it as a reverse-lottery). I'm not surprised they wouldn't allow tickets to the Falklands on points, given that Lan owns the one flight connecting the islands to the world. Can't imagine what the issue was with ticketing.

Finally, Lan has just recently joined OW, so there might still be some issues getting everything working properly. I'm currently having trouble getting some AA flights credited to my LanPass account. Oz, if you need an ombudsman in Chile vis-a-vis Lan, drop me an email. I won't be back for a couple of weeks, but they do have an office close to my house. And I speak Spanish