I did check all permissions. I opened up as much as I could to everyone. Gave the everyone group FULL CONTROL (in addition to all administrators) of all directories involved.
Did you attach your XML to this thread? I don't see it if you did.
I am taking a close look at the logs on the client, which seem to be a little more informative than the logs on the core, which are quite cryptic and don't really give any clues as to what the real problem is.