The malaysian driftwood is probably fine,
The driftwood will take up some space, but the fish per gallon rule really doesn't work anyhow, check the sticky in the newbie forum. Driftwood is one of the creature comforts that a lot of fish like and some require. the loss of water volume is probably less significant than it may seem, but I would definately find an appropriate size peice and not go too big with it.
LFS? Took me a while to get used to all of the abbreviations, this is the first discussion site I have ever participated in, and things like IMO, IMHO, IME, LFS etc. took me a long time to figure out. The lights eventually came on but they did so very slowly for me.
Dave