this is a great advice.
i just added a 2nd HDD to my dns 323 (FW 1.05) , somehow dns323 wanted me to reinstall bittorrent on the 2nd HDD, which unfortunately I did (don't do this!!) from then on it gave me error message "Connection to server failed".
so as per the above steps, i deleted nas_prog folders and then removed the 2nd HDD, then reinstalled bittorrent on the 1st HDD, shutdown the dns, then placed back the 2nd HDD, then bittorrent is working fine. not even the "Connection to server failed" error message.
i lost my previously unfinished torrents though, coz i deleted the BT folders also (i was not sure what to delete, so I deleted all of the BT related folders).
anyway, just wanted to post that this method works!!.
thanks!