I'm getting the EXACT SAME error message. Timeout occurs, and getting that XP-mitchell blah blah in my eqhost file. I've switched it, removed that line, and it KEEPS coming back.
I put it exactly how I wanted it, made sure that it looks like this:
[LoginServer]
Host=192.168.1.xxx:5999
on 2 seperate lines (for some reason, I didn't think to change it on copy/paste).
Made the file read-only (I DONT LIKE THINGS CHANGING MY FILES!!!)
it got past the timeout. now it just is stuck on "logging into the server, please wait"...
but that's another topic...
Hope this helps!