One row of boxes at the top of a two line display almost always indicates either bad initialisation or a data or control wiring fault and is because the diisplay controller is still in its power up default of single line mode which needs a different contrast voltage to two line mode.
As the display section of the schematic looks sane, the problem is probably either the actual sequence used or its timing - either inter-command delays or setup and hold timing for strobing out each nibble. See: http://www.microchip.com/forums/FindPost/825310
Its generally advisable to double the delay times in the datasheet for your specific display controller initially then reduce to 1.1 times either the datasheet time or the genuine HD44780 times (whichever is greater) once its running properly. This can easily be done if you #define them all with a multiplier.