Turns out that I'm a moron and you guys were right. The bikes fine but my common sense not so much haha.
But maybe I do have the same problem as you tonski. It doesn't fall between the rings, however.
The chainrings are stock and the derailleur is called forte microshift which is just a rebranded microshift arsis (more info on that on the web). It works just like the shimano components.
I can't figure out how to post a picture but you can see the derailluer here:
http://www.flickr.com/photos/30297767@N07/4106858582/
Thanks for the help everyone!