I am not quire sure about the aura surrounding the anvils, to be honest.

I agree - there are not right. They look like an aura rather than a reflection of the flames. Ditto for the weaponrack. The flame highlights should:
-Be sharp only on the outside, and fuzzy on the inside of the object.
-Cover c. 20% of the object.
-Only affect the edges closest to the forges.
-Be MUCH brighter.

Its hard to explain without the actual file of which to show you - perhaps have a look at ENC 28 Madness at Gardmore (follow link below) and look at the table with the ches-set. Do you see that the top right of it is much lighter and yellower than the bottom left? Ditto the rubble. That was done using the technique I outlined above: 1 dark overlay layer on the bottom left of the object (you skip this part, instead you need to delete the black covering half of the object); 1 white layer set to overlay on the top right 65% opacity; 1 bright orange layer set to 65% opacity on the top right (important! - not exactly the same as the white layer - otherwise you would see edges).

Ok I think I know what has gone wrong - you are drawing your light layers OUTSIDE of the object, which makes it look as if there is a lightsource coming up from underneath. They need to be INSIDE the object only. I think you got my instructions mixed up above - reversed the black/white or something. Or mixed up about Alpha to Selection? This was supposed to select everything EXCEPT the transparent bits.