I have a similar problem, but in this case, the clietn is an iPAQ H3975 PocketPC, using the included PPTP Client, with the MS Enhanced Encryption Pack loaded.
I was able to connect without any problems using version 5.0 somewhere in the upgrade path to 5.6 it stopped working.
This is what the file /var/log/messages reports when I try to connect.
Thank you...
Feb 17 14:19:20 sme-1 pptpd[2365]: MGR: Launching /usr/sbin/pptpctrl to handle client
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: local address = 192.168.100.1
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: remote address = 192.168.100.245
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: pppd speed = 460800
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: pppd options file = /etc/ppp/options.pptpd
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Client 66.176.237.166 control connection started
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Received PPTP Control Message (type: 1)
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Made a START CTRL CONN RPLY packet
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: I wrote 156 bytes to the client.
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Sent packet to client
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Received PPTP Control Message (type: 7)
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Set parameters to 1525 maxbps, 64 window size
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Made a OUT CALL RPLY packet
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Starting call (launching pppd, opening GRE)
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: pty_fd = 5
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: tty_fd = 6
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: I wrote 32 bytes to the client.
Feb 17 14:19:20 sme-1 pptpd[2365]: CTRL: Sent packet to client
Feb 17 14:19:20 sme-1 pptpd[2366]: CTRL (PPPD Launcher): Connection speed = 460800
Feb 17 14:19:20 sme-1 pptpd[2366]: CTRL (PPPD Launcher): local address = 192.168.100.1
Feb 17 14:19:20 sme-1 pptpd[2366]: CTRL (PPPD Launcher): remote address = 192.168.100.245
Feb 17 14:19:20 sme-1 pppd[2366]: pppd 2.4.2b1 started by root, uid 0
Feb 17 14:19:20 sme-1 pppd[2366]: Using interface ppp0
Feb 17 14:19:20 sme-1 /etc/hotplug/net.agent: assuming ppp0 is already up
Feb 17 14:19:20 sme-1 pppd[2366]: Connect: ppp0 <--> /dev/pts/1
Feb 17 14:19:20 sme-1 pptpd[2365]: GRE: Discarding duplicate packet
Feb 17 14:19:23 sme-1 pptpd[2365]: CTRL: Received PPTP Control Message (type: 15)
Feb 17 14:19:23 sme-1 pptpd[2365]: CTRL: Ignored a SET LINK INFO packet with real ACCMs!
Feb 17 14:19:23 sme-1 pppd[2366]: CHAP peer authentication succeeded for johnisler
Feb 17 14:19:23 sme-1 pppd[2366]: MPPE required but peer negotiation failed
Feb 17 14:19:23 sme-1 pppd[2366]: Connection terminated.
Feb 17 14:19:23 sme-1 pppd[2366]: Connect time 0.1 minutes.
Feb 17 14:19:23 sme-1 pppd[2366]: Sent 24 bytes, received 60 bytes.
Feb 17 14:19:23 sme-1 pppd[2366]: Connect time 0.1 minutes.
Feb 17 14:19:23 sme-1 pppd[2366]: Sent 24 bytes, received 60 bytes.
Feb 17 14:19:23 sme-1 pppd[2366]: Exit.
Feb 17 14:19:23 sme-1 pptpd[2365]: GRE: read(fd=5,buffer=804d940,len=8196) from PTY failed: status = -1 error = Input/output error
Feb 17 14:19:23 sme-1 pptpd[2365]: CTRL: PTY read or GRE write failed (pty,gre)=(5,6)
Feb 17 14:19:23 sme-1 pptpd[2365]: CTRL: Client 66.176.237.166 control connection finished
Feb 17 14:19:23 sme-1 pptpd[2365]: CTRL: Exiting now
Feb 17 14:19:24 sme-1 pptpd[2163]: MGR: Reaped child 2365
Feb 17 14:19:24 sme-1 /etc/hotplug/net.agent: NET unregister event not supported