Ok. Good call Steve.
If you are using OLSD V3 then you need to run a jumper wire on the Arduino board from digital Pin 8 to the CTS pin for the FT232RL chip. Usually the chinese Arduino clones have a pin labeled CTS on a 4 pin header. Here is a quote from my web site that explains it:
"In order for the software/hardware to work properly a jumper wire needs to be added between the CTS pin on the Arduino/FTDI chip and digital pin 8. This is used to control the stream of serial data being sent to the Arduino. Some boards make this easy and include a pad for the CTS pin (Arduino and Seeduino brands). The Freeduino will work however it does not break out a pad for the CTS pin (this makes it a bit more difficult to modify)."
This is probably why it appears that the hardware is hanging up. The firmware uses this for flow control. If it isn't hooked up then there is no flow.
V4 OLSD firmware uses digital pin 7 instead of pin 8.
If you are interested in a empty board (and don't mind a bit of surface mount) PM me with your mailing address and I will send you one.