And, I'm slowly climbing back into this.
I now have full access to our beta server, and will obtain a Moodle account for you to test on. Contact me privately. This problem still exists. I have again checked the parameters you mentioned (both at 100m), and "memory_limit" (128m) which PHP help files say is related. Of course, I'm way out of my element here.
My tests this morning showed that anything 8 megs or less made the trip just fine, but a 22 meg flash video failed - same as above. I also checked time-out settings, and they seem fine.
Yes, I'll look forward to ver. 2. I have Adobe Flash Encoder 3 installed, and your ver. 1.8.7 doesn't recognize it, insisting on Flash Encoder 2.5 to encode to H.264. Hope it's coming soon! And thanks again for being so easy to work with!