He fixes it with that same "use external ip address for passive" check box.
Yours works because you're using active ftp - I can tell that because you said yours worked before you went to the 1.08 beta - he's using passive ftp - I can tell that from the error messages he is reporting.
Active & passive ftp are two distinctly different animals - it's either you get lucky and it works or you (not personal, but any user attempting to use ftp on a DNS-323) sit down and make a concious decision to understand how ftp works or you end up going around in circles and becoming frustrated.
It is also, at least in my opinion very important, that you (again not personal) recognize that D-Link is now fixing a "known broken" passive ftp implementation and it may still have bugs in it - I would not be surprised if the implementation was checking the "external ip" only during configuration, rather than everytime it needs to send the external ip address.