MPPE, strange problems

Using the following setup:

2.4.22 with mppe pathces, pppd-2.4.2 (also tried with current CVS).
Poptop as VPN server. Clinet: windows XP (standard VPN connection).

The problem: clients connect fine, 128 bit stateless encryption session
established, ip assigned. Everything looks great, can ping everything...
Can connect to machines within local subnet, but...opening web pages
on anything that is not on local network doesn't work, it resolves the
hostname but it just hangs there, no traffic on the VPN link, ping still
works. FTP connection to hosts outside LAN, works, but any transfer
dies few seconds after initiation. Again no traffic on the VPN line.
Still, ping is working. Flushed ip tables on the VPN server, there
is no NAT, only thing running is the poptop server. Tried with 2.4.20 and
got the same results. What is most interesting that if I turn mppe off
everything works without any probles, web pages open, ftp transfers go
uninterrupted. What could be causing this ? The only trace in the logs
are: nf_hook: hook 0 already set. skb: pf=0 (unowned) dev=eth0 len=46.
Anyone expirienced something like this ? Any idea what could be causing
the problem ?

--
Andrej Brkic
E-mail: (E-Mail Removed)