Having looked at the code a bit further, I have a theory that it was
impossible to reach the zlib_inflateSyncPacket call ppp deflate needs.
The patch below fixes that and also adds some debugging so if that isn't
the problem, we might get some further clues as to what the problem
is...

Thanks for the patience :)

Richard

Index: linux/drivers/net/ppp_deflate.c
===================================================================

--- linux.orig/drivers/net/ppp_deflate.c 2007-01-18 00:52:50.000000000
+0000 +++ linux/drivers/net/ppp_deflate.c 2007-05-01 22:21:27.000000000
+0100 @@ -488,6 +488,13 @@ int z_decompress(void *arg, unsigned cha
  for (;;) {
   r = zlib_inflate(&state->strm, Z_PACKET_FLUSH);
   if (r != Z_OK) {
+   printk(KERN_ERR "z_decompress%d: inflate returned %d (%s)"
+    ",av in %d, av out %d, t in %ld, t out %ld, dp %d,"
+    " of %d, is %d, os %d\n",
+    state->unit, r, (state->strm.msg? state->strm.msg: ""),
+    state->strm.avail_in, state->strm.avail_out,
+    state->strm.total_in, state->strm.total_out,
+    decode_proto, overflow, isize, osize);
    if (state->debug)
     printk(KERN_DEBUG "z_decompress%d: inflate returned %d (%s)\n",
            state->unit, r, (state->strm.msg? state->strm.msg: ""));

Index: linux/lib/zlib_inflate/inflate.c
===================================================================

--- linux.orig/lib/zlib_inflate/inflate.c 2007-01-18 00:53:08.000000000
+0000 +++ linux/lib/zlib_inflate/inflate.c 2007-05-01 22:03:53.000000000
+0100 @@ -743,12 +743,14 @@ int zlib_inflate(z_streamp strm, int flu

     strm->data_type = state->bits + (state->last ? 64 : 0) +
                       (state->mode == TYPE ? 128 : 0);
-    if (((in == 0 && out == 0) || flush == Z_FINISH) && ret == Z_OK)
-        ret = Z_BUF_ERROR;

     if (flush == Z_PACKET_FLUSH && ret == Z_OK &&
             (strm->avail_out != 0 || strm->avail_in == 0))
   return zlib_inflateSyncPacket(strm);
+
+    if (((in == 0 && out == 0) || flush == Z_FINISH) && ret == Z_OK)
+        ret = Z_BUF_ERROR;
+
     return ret;
 }