Seems to be bugged again except I hard crash at downloading terrain this time. used same test, Logged onto Loevon's account and can play fine and we were both building in the same area.
The fix seems to be the same as before from same thread requiring my server inventory to be deleted.
http://webcache.googleusercontent.com/search?q=cache:8H-WaV3yc2IJ:www.minecraftforum.net/viewtopic.php%3Ff%3D1013%26t%3D35927+minecraft+crash+at+downloadng+terrain&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a