If it's uploading the file from the PC, it will be subject to PHP's upload limit, regardless of WP's own limit. (There may be more than one setting; it's been a while since I thought about this, but there should be some discussion if you search for it.) Be sure to run the script
<?php phpinfo(); ?>before and after making a change to php.ini, to confirm that your change "took".
As for WP being changed to lunarpages.com, I would assume that someone was spamming using that domain and it was "censored" because of that. I'll ask the other moderators what's up.