Can't heat bed and nozzle simultaneously... (Page 2 of 2)

Unfortunately it's probably a combination. I haven't invested in a commercial oscilloscope yet, but this is my suspicion. In fact, in many cities, you can go to your wall outlet at midnight with a voltmeter and read around 120V (in North America), while at about 6-7pm the same outlet could be as low as 105V. Everyone is town is cooking dinner. More current draw = lower voltage. This is basically the same problem, in both the wall and the PSU. A wall outlet in a small apartment, in the wiring configuration of an apartment, are very prone to having slight voltage drops when a sudden current inrush is caused. There are many appliances I use in my apartment that cause the lights to slightly dim momentarily. In the same way, the power supply unit (PSU) is trying to convert one voltage to another. As the input changes, the circuitry must adapt to keep the output constant. A sudden draw of power to run 2 heaters + 4 stepper motors intermittently can easily cause a cheap PSU to drop in voltage a tiny bit. The UPS helps with this by at least providing steady power in the form of a battery.

Now, I haven't read the datasheet for the main microcontroller, but as I don't see any LM780x chips on the board, I will assume it runs at 12v. Which means its "brown-out" condition is probably around 11.3v. For a cheap power supply to try and meet the current rushes of the heaters with an unreliable power source itself, a 0.7v drop is borderline expected. IMHO, the person who designed the PCB should have put a 10uF electro. and 1uF ceramic cap on the chip's input so the chip would be immune to such inadequacies. In reality, if I ever have trouble again, I will just swap right over to a computer PSU. 400W minimum and far better current-draw response.

The same thing is happening to my Solidoodle 4, I cant heat the nozzle and bed at the same time because repetier crashes. Also, when I try to manually control the printer, the Z axis moves in the oppsoute direction. When I hit Z+ it goes down and Z- goes up, thats weird, right?

If I was in your position again, I'd consider returning the PSU just so I had a working stock one, but I'd save the wait and order a new one myself on the side. Get a little 12V 300W PSU off of Amazon for <$50, some 2.5mm jacks (check the page for exact barrel dimensions - I forget) <$5, a surface-mount fuse panel (~$5) for the 12v outputs, and a fused plug with built-in switch (the kind of plug that a computer power cord plugs into) for the input ~$6. Wire it all up, design and print some mounts for it to mount nicely on the back of the printer. Then you're golden, especially if you want to do any future upgrades (more fans, LEDs, RaspberryPi host, etc).