I've just spent the last few hours wrestling with a bug in Apple's Security Update 2007-004. The fact that this post is here means I found a solution (copy the ftp.plist file from a non-update server so xftpd gets launched instead of ftpd).
Sorry I've been silent so long. I do appreciate everyone who's emailed to ask me to write again. There are many things to discuss, but I've just been crushed at work. We're growing at a breakneck pace and it takes all my energies to keep up.
I'll post again soon, I hope.
Did I mention the site is hosted on a Mac Pro now?