Hey ken, i couldnt make this issue on that demo, but in my website i got this.
INFO ScriptVersion ,20110114-01
INFO UploadType/addontype,Auto/Silverlight
BEGIN event initialize
END event initialize
BEGIN event browse
END event browse,true
BEGIN event silverlight select
END event silverlight select,true
BEGIN event start
END event start
BEGIN event taskstart,{Birdman Fire Flame (Remix) ft Lil Wayne.avi:233171760}
END event taskstart
INFO InitFrame
INFO silverlight report,response,65f47bbd-261e-4d6b-9b4d-0102f0732ef1,Error:System.Exception: No Request Files! Content-Length:488133
at CuteWebUI.UploadModule.a(HttpContext A_0, Guid A_1),
INFO Change to Silverlight Load Mode
INFO silverlight start load mode ,20658795/233171760
BEGIN event error,Birdman Fire Flame (Remix) ft Lil Wayne.avi:SLM error:Error:Invalid length for a Base-64 char array.
END event error,true
BEGIN event taskerror,error:SLM error:Error:Invalid length for a Base-64 char array.
BEGIN event taskerror
BEGIN event stop
END event stop
Should be a configuration problem??