OK.. some more points to clear up:
NZ are 6th, although you may notice they are just 4 points behind Pakistan, which is hardly anything. Why are NZ so low? Well the reason is whilst NZ have a very good home record, beating everyone except Australia and Sri Lanka, their away record is very poor. England are the only side NZ have beaten away from home and they even lost in Zimbabwe. This result is particularly punishing in terms of their ranking because NZ are the only team other than Bangladesh and Kenya to have been beaten by Zimbabwe. New Zealand also have a poor neutral track record, England and West Indies being the only team of note they have a winning record against. Hence with a good home record but very poor away record, New Zealand sit mid-table overall.
The other query regarded South Africa being 2nd - well apart from Australia, South Africa have beaten every other side at home, and convincingly. Away from home they have been inconsistent, losing more series than they have won, but mostly against strong home sides such as Australia, Sri Lanka and New Zealand. Again on neutral ground they have a good record. So overall South Africa are the strongest home team, average away, but overall very good.
As Steulen points out the rankings are based on two series, so whilst New Zealand have been very successful in recent times, if you go back a few years they were average at best, and that is why they don't have a very high ranking. Clearly they will climb the rankings so long as they maintain their recent form. As for South Africa, they have lost a few away series of late but are rewarded for their consistent performances over recent years.
I hope this helps answer your queries, if you have any more comments or queries please post, and my apologies for taking so long to answer in the first place.