is there any way to hold comments for admoin approval ? this would be a great way to moderate comment spam ...

Yep, comment moderation is in the works for 1.1... perhaps a month or more away.

What is the correct procedure to "approve" a comment? When I deselect "moderation" and click "delete and update moderation status" I get this:

Warning: array_diff() [function.array-diff]: Argument #2 is not an array in /home/powervo/public_html/gallery/zp-core/admin.php on line 232

Warning: Invalid argument supplied for foreach() in /home/powervo/public_html/gallery/zp-core/admin.php on line 233

Warning: Cannot modify header information - headers already sent by (output started at /home/powervo/public_html/gallery/zp-core/admin.php:232) in /home/powervo/public_html/gallery/zp-core/admin.php on line 266

There is a bug in the handling if all messages are released.

replace admin.php line 230
$notreleased = $_POST['notreleased'];
with
`if (isset($_POST['notreleased'])) {

    $notreleased = $_POST['notreleased'];

  } else {

    $notreleased = array();

  }`

I'm having the same problem after upgrade.

When I turn on "Mark all comments for moderation", the user gets an error message.

Try it here: http://www.reakelly.com/gallery

This error is different from the one you described in your post http://www.zenphoto.org/support/topic.php?id=1853&replies=2. Please see the response to that post for the solution.