This is definitely something to do with proxies. I have the exact same problem. I had previously jailbroken my iPod but now get to the part where it says connecting to server. I did prove this is a proxy issue by connecting to the web directly but found I still have a problem. Redsn0w says goes through all the steps but when it comes to waiting for reboot... it says completed but never actually jailbreaks... grrrr. this is frustrating. I think now the issue is the laptop is running OS X 10.5.7