This took me many hours of investigation. The issue was resolved once I found that there is a minor bug reported in the virtuemart development tracker, and on the virtuemart forums. This bug seems to be as early as viersion 1.1.7. I am using 1.1.9 now, with the bug fix in place, and the old magiczoom module is working again.
$_REQUEST['usefetchscript'] = "0";
Needs to be added near the top of the virtuemart configuration file in the administrator/components/com_virtuemart/ directory. This can be learned about here:
http://forum.virtuemart.net/index.php?topic=68640.0
The issue is that the fetchscript.php file is not loading css and javascript files properly.
FYI (to help others in the future)