Let's see... well, I guess the first step would be to stop the function modifying the other VECTORs -- only the ANGLE should be modified, and I wonder if re-using the same vectors over and over again after they've been modified has something to do with the problem.
Code:
function alignToVec(ANGLE* entAng, VECTOR* vec, VECTOR* axis, var factor) {
	VECTOR locVec, locAxis;
	vec_set(locVec, vec);
	vec_set(locAxis, axis);
	vec_rotate(locAxis, entAng);
	vec_normalize(locAxis, 1);
	vec_normalize(locVec, 1);
	VECTOR rotAxis;
	vec_cross(rotAxis, locVec, locAxis);
	
	//USE ONLY ONE OF THE FOLLOWING TWO LINES!!!!!!!
	//var angle = -acos((float)vec_dot(locAxis, locVec)) * factor; // instant rotation
	var angle = -acos((float)vec_dot(locAxis, locVec)) * factor * vec_length(rotAxis); //smooth rotation
	
	ANGLE rotAngle;
	ang_for_axis(rotAngle, rotAxis, angle);
	ang_add(entAng, rotAngle);
}
The next thing I would try is to make sure we're passing the correct information -- alignToVec(&V_Ang, &V_Nrml, vector(0, 0, 1), 1);

We add in the "&" to make sure we're passing a pointer to those parameters -- something Lite-C normally does automatically, but under occasional circumstances it won't. If the wrong address is being passed, V_Ang won't get modified, and we get the behaviour we've been seeing.

Fingers crossed!

Formerly known as JulzMighty.
I made KarBOOM!