I'm not *quite* out yet, but in a few moments.
I don't see anything wrong with your GUI InstaCorr usage -- after it says "ready for work", it should work -- and it does on my computer just now. So that is a mystery to me.
The GroupInCorr screen output also says it is ready (connected). The only thing I can think is that you are running 2 copies of AFNI -- perhaps one is hidden away somewhere -- and it connected to the wrong one. You could try the command "killall afni" to make sure that all copies of any program named "afni" are dead. Followed by "ps aux | grep afni" to see if there are any stray AFNIs running -- you should see only something like
rwcox 72407 0.0 0.0 4268080 816 s001 R+ 11:37AM 0:00.00 grep afni
as the output, which is the grep command itself with the string "afni" in it.