The PS3 was running the latest update as of a "Check for Updates" on the PS3 as of last night 1/21/2008 at 9pm PST. I vaguely remember it being like 2.13 or something, the update that happened what seems like a month ago was the last.
The DNS-323 was... well it turns out thats a good story. I was mistaken it turns out, I would have swore that it had 1.03 loaded on it, I was wrong, it had a pre-release copy of 1.04.
I don't normally work with the DNS-323 so I spoke with the guy who moderates this board (and happens to be the foremost expert on the product) and he said that 1.03 should not work for me. Time to give it a shot at home, see if I can't make the round peg fit in the square hole (I have a big sledge for the job).
I will be trying again tonight with 1.03 this time, I will also get my exact PS3 firmware. The good news is that assuming this build of 1.04 ever becomes public it will be fixed! While I'm at it any more specific tests?
Unfortunately I do not own a Xbox 360 or I would try that too.