ANONYMOUS The station preferences are per-instance and not per-widget because many people are using the widget to monitor several stations at the same time. That means that every time you update you instantiate a fresh widget and the preferences for the old one are lost. It's a small price to pay for functionality. The widget is usually quite static and updates are few and far between, but in this case an update was necessary to add the new 7-day forecasts from Environment Canada.
The missing "done" button is a well-known issue with dashboard: since switching to 7-day forecast caused a resize of the widget, installing over the old one didn't unload the css properly and left it in a mangled state. All one had to do is hit apple+R while mousing over the widget to get it fixed. There's a note on the widget's website to that effect, but unfortunately it didn't make it elsewhere.
I'm sorry for your troubles.
(Version 3.7)