So I have Python 2.5 because it is needed for PyFFI and other programs and Python 2.6 is needed for Wrye Bash. Now I see that Wrye Flash wants Python 2.6.5. Is it bad to have all these Python installs?

2.6 was almost purely a bugfix/enhancement release, anything that runs on 2.5 should also run on 2.6, and 2.6.x releases are inherently bugfix releases and so will overwrite your 2.6.

However, it's quite fine to have as many python installs as you wish, there's no detriment, just that in this case, it's unnecessary.