Finally got a chance to try out your debug version of download.c. It worked! You do need cygwin, but I had it on my system anyway so that wasn't a problem . I was going to give you are more full report (got some kind of ".. error 16" message just after the finding the empeg bar and before Hugos bootstrap comments) but Win2k did the old BSOD thing on me (who the heck said Win2k was more stable than NT?!!). Thanks anyway. Hopefully this will give you and Tony something to work with.
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(list 6284, Mk1 S/N 00299 4GB blue [sold]. Mk2 S/N 080000094 20GB blue)