I was there...
I was an election agent in May, so I was at one of the counts, at least until it was suspended and I went home to bed. It was fascinating to watch the papers go through the scanners and watch the OCR (or image matching, or something) software doing its job. From what I could see, it was working well. It should have been a quick and accurate count. However, as far as I can understand, there were two problems; one technical, one organisational.
The technical problem was the one that stopped the stopped the count on the night. Having done the right thing and distributed the processing across many (I think 31) counting centres, some towering genius then introduced a single point of failure with a central server to which all counts reported. The central server, of course, failed for a lengthy period of time. This was serious, but it was not the cause of the rejected ballots.
The organisational problem seems to have been a rather bizarre algorithm in the way that "recognised" papers were accepted. The parliamentary paper had two voting columns - one for the MSP, one for the party. In Scotland we choose one MSP for each constituency on a personal vote, then another seven from party lists. Yes, eight MSPs per constituency. It seems that if a voter cast a party vote but no personal vote, the entire paper was rejected. This worked against many of the smaller parties (we have a multi-party system up here) and may have led to the annihilation of the SSP. There is a good argument that whoever devised and/or approved of this algorithm is culpable in an electoral fraud. This fault only affected the parliamentary election, not the local government election.
Despite these problems I think that the voting methodology was good. PR is a good way to elect politicians, but too complicated to count and allocate to do manually. I would have no hesitation in using e-counting again next time, but I will bite, kick and scratch not to allow e-voting. At least we still have a paper trail, and if we really wanted we could run all of the papers through the machines again.
PS Hope you don't mind the anonymity, but I'm going to be an election agent again and I need to keep on the good side of our Returning Officer.