Alright, feels like I've tried just about everything and still I am not getting it to work.
When I have the parserfunctions #if & #ifexist disabled it looks like the other magicwords are parsed correctly though it is hard for me to be sure as I am not really familiar enough with the wiki syntax and how they should work.
When I enable the above mentioned parserfunction we only see the English option. So that leaves me wondering if #if & #ifexist is really evaluated correctly.
Another thing that strikes me is, if this is really even working on a 1.7 wiki. It would seem that MediaWiki.org started their template in december 2006 so it is possible I guess that this is actually something for 1.8 & above.
I am pretty much out ideas, if anyone has any idea I am interested to know about it.
Hopefully php 5 isn't that far away and thus Wiki 1.10.