Well, first thing to do with mala is just completely take it out of the picture. Can you run Mame straight from the command line? That's the first step, because all Mala will do is start the Mame exe with some command line parms to tell it which rom to load.
Once you're sure MAME is running right, check your mala folder for any MLG files.
Those are the game lists.
If you've got one that's HUGE, that's the one that likely has all the games in it. It's just XML so you CAN just edit the file to your liking.
You might also grab a copy of ROMLISTER and use it to generate an MLG file of the roms you actually have.
But you should be able to the refresh list. I don't recall whether it'll remove games that are no longer there though.
What you might try is BACK UP your main game list, delete it, then run Mala and try the refresh main game list again.