I said on my extension application I would file Married-seperately... can I now file jointly?

Yes. If your spouse also filed an extension you can just abandon that account. However, if your spouse paid any estimated taxes with their extension, don't forget to manually enter what they paid already when working through your joint return. You'll deal with it when you get to it in the program, under the Deductions & Credits tab in the section for Estimates and Other Taxes Paid.

What if my spouse failed to file a state extension?

Irrelevant. Since you filed a state extension and you will now be filing a joint state return, if you underpaid state taxes when you filed the state extension, interest will be assessed on the underpayment amount. No different than it would be if your spouse filed separately.