Clegg chose a coalition with the Conservatives after the last election because they were the party with most votes, not because he couldn't work with Brown. The so called Rainbow Alliance, badically everyone except the Conservatives could have, in theory have formed a Government, but Clegg would have known that would be hellish, and a coalition with several parties would mean less power for the LibDems. A coalition of just two was a better fit for the LibDems. As for Clegg not being able to work with Milliband in a coalition, he may not have any alternative. If the pisition after the next election is that Labour have the most seats but not a working majority, Clegg will not hesitate to form a coalition with Labour if invited to. Though I doubt Clegg will still be party leader after the mauling the LibDems will get.
If the right bye election comes along in the next 18 months, UKiP could quite easily win it and get an MP. They nearly won Eastleigh, and probably would have if Farage hadn't lost his bottle (and failed to stand). In a General Election they are unlikely to win any seats, but their presence will be very disruptive for the two main parties.