Yes, that number is the count of undisplayed updates since the page loaded. You can click the number to display the hidden updates. I'm not sure if there is a problem with the styling of that notification under XenForo, or if there is a conflict with other elements of your style. I will have to mess around with the widget myself and get back to you on that.
Our devs never liked truly live updates, when the newest update is always at the top. It gets really annoying on a busy site when you're trying to read and everything gets pushed down. This is especially bad in a small widget like this where only a few items can be viewed at once without scrolling. When it was truly live, on some tests the current view was completely pushed down and lost until the scrollbar was used to try to find your place, often unsuccessfully.
So we opted for the Twitter-like functionality, where at the top it alerts you there are new items. This way you only refresh the widget when you are ready. The current method will not be changed. If you don't think it adds much, I believe you can disable the "live" part of the widget in the corresponding sidebar block's config.