I think "diary" is intended to refer to a user's "personal blog", that is, to the collection of all the "diary entries" which we actually call "diaries". If you go to a user's pages and click on the "diary" tab, you see a personal blog. I myself use the link to /user/migeru/diary as my "blog address" or "homepage" when I post comments on other blogs of the MovableType variety.

"Stories" are supposed to be articles for the front-page, going through a user-moderation queue [I suggest reading the description of scoop in wikipedia]. We have inherited from DKos a particular "two-tier" philosophy in which users cannot write "Stories", but front-pagers' stories do not have to go through moderation.

It seems that the possible configurations are quite varied, and originally (for kuro5hin, I guess) the distinction between the 'community magazine' and the 'user blogs' was sharper.

"It's the statue, man, The Statue."