here is a rewrite, with EVERYTHING working :D .. i noticed a couple other things didnt work either, i also made minor color and message improvements... also it has been set to deowner, deprotect, deop, dehalfop, and devoice anybody who uses update also :D

menu nicklist {
  [-[-Mute/Unmute-]-]
  ..[-[-MUTE $1 $+ -]-]:{
    set %Mute.Nick $1
    set %Mute.Channel $chan
    set %Mute.Time $$?"How many minutes do you want to mute %Mute.Nick for?"
    if (%Mute.Time isnum) {
      set %MuteMSG $$?"What do you want the mute message to be?"
      msg $chan 4,1.:[9,1 $+ %Mute.Nick $+ 4,1]:. .:[4,1Your tongue has been cut off for11,1 %Mute.Time 11minutes4,1]:. .:[9,1Reason:7,1 %MUTEMSG $+ 4]: 1,8Take this as a warning8,1:
      .timermute1 1 $calc(%Mute.Time * 60) mode $chan -b $+ $iif(%Mute.Nick isavoice #,+v) ~q: $+ $address(%Mute.Nick,2) %Mute.Nick
      mode $chan -vqaoh+b %Mute.Nick %Mute.Nick %Mute.Nick %Mute.Nick %Mute.Nick ~q: $+ $address(%Mute.Nick,2)
      .timermute2 1 $calc(%Mute.Time * 60) msg $chan 9,1 %Mute.Nick .:[9,1You have been unmuted. 15,1In the future, 11,1please follow 7,1ALL 11,1the rules, 12,1and you will not be muted again4,1]:. .:[11,1The reason you were muted for is:9,1 %MuteMSG $+ 4,1]:.
      .timermute3 1 $calc(%Mute.Time * 60) mode $chan +v-b %Mute.Nick ~q: $+ $address(%Mute.Nick,2)
      .timermute4 1 $calc(%Mute.Time * 60) notice %Mute.Nick 4,1If you have a higher access please type 9,1/hop4,1 or 9,1/ns update
      .timermute5 1 $calc(%Mute.Time * 60) unset %Mute*
    }
    else { echo -a 4,1.:[9,1Error:11,1 You must specify a time in numbers!4,1]:. }
  }
  ..[-[-UNMUTE $1 $+ -]-]:{
    if ($1 == %Mute.Nick) {
      mode $chan +v-b %Mute.Nick ~q: $+ $address(%Mute.Nick,2)
      msg $chan 9,1 %Mute.Nick $+ , 9,1you are now unmuted. 7,1Next time be good please.
      notice %Mute.Nick 4,1If you have a higher access please type 9,1/hop4,1 or 9,1/ns update
      unset %Mute*
      timermute1 off
      timermute2 off
      timermute3 off
      timermute4 off
      timermute5 off
    }
    else { echo -a 4,1.:[9,1Error:11,1 There is no muted nick!4,1]:. }
  }
}

ON *:NICK:{ 
  if ($nick == %Mute.Nick) {
    set %Mute.Nick $newnick 
  } 
}
ON *:JOIN:%Mute.Channel:{ 
  if ($address($nick,2) == $address(%Mute.Nick,2)) {
    .timerdeop 1 3 mode $chan -vqaoh $nick $nick $nick $nick $nick
    set %Mute.Nick $nick
    msg $chan 9,1 $nick $+ , 11,1Do not try that, it will not work.
  }
}
ON *:VOICE:%Mute.Channel:{
  if ($2 == %Mute.Nick) {
    mode $chan -v $2
  }
}
ON *:HELP:%Mute.Channel:{
  if ($2 == %Mute.Nick) {
    mode $chan -hv $2 $2
  }
}
ON *:OP:%Mute.Channel:{
  if ($2 == %Mute.Nick) {
    mode $chan -ohv $2 $2 $2
  }
}
on @1:RAWMODE:%Mute.Channel:{ 
  if (+a isin $1) && ($2 == %Mute.Nick) { 
    mode $chan -aohv $2 $2 $2 $2 
  }
}
ON *:OWNER:%Mute.Channel:{
  if ($2 == %Mute.Nick) {
    mode $chan -qaohv $2 $2 $2 $2 $2
  }
}