Hey steve, yes the nests need to be removed. In very large bat houses there is often enough room for everybody ie bats and wasps etc. but in smaller bat houses you need to get them out and should remove them from any bat house. What size is your bat house? and more importantly do your chamber partition/spaces exceed 3/4" ? if so it invites wasps etc. Never use insecticide obviously, I use a long stick and poke them out or use my hose with jet spray if I am sure no bats are present. Any chance you could photograph with digicam and post? I will give you webspace for photo if you can.
