Nickname VS Username VS display name seems like it's the issue. To me it's pretty counter intuitive what is called what.
What's called user name is what I'd call log-in name (since that's what you log in with, and what you only see)
What's nick name is what I'd call user name (it's the name I therefore use as my main identification throughout silly name/avatar antics)
And display name is what I'd call nick name (because until I'm fully recovered you know me as upsidedown wobbleangles)
I think switching the definitions at registration time around would help - I see a lot of forum users who look like they mixed them up too, and just checked and it's not really explained on the registration page.