Hi,
Not sure if I should report this in trac or not. Seems this function uses a specific "Zenpage" theme option variable - zenpage_zp_index_news. So when not using the "ZenPage" theme, this theme option still takes effect in the function. If you have this checked, but your custom theme does not utilize this variable, the News link points to the front index page, when it should be pointed at news.php. Hope this makes sense....