I'm a bit uneasy that you seem to have left the OE's floating for your level shifter. They should most probably be pulled high. Not convinced its the issue, but I'm just putting it out there.
EDIT: Editing out the rubbish info I posted
Marty wrote:The Level Shifter is Sparkfun's level translator breakout board with the TXB0104 surface mount chip. The breakout board connects both OE pins to VCCA (the lower voltage). It is possible to easily open the connection between VCCA and OE, but I have not done so.
Ah fair enough then.