I sorta fixed it. It doesn't work exactly like in original forum script, but it will simply hide entirely the whole post block of the person you're ignoring. So you won't see their message at all. (in original script you see the "You're ignoring this person" thing with hidden post content that can be revealed with click). Some earlier forum modification package possibly broke it. So it's changed now that whole post block will be hidden.
For now you can still see what the person wrote in the Reply window. Just a temporary solution.