Something sounds very strange. Overriding OnFileQueued shouldn't hurt anything but definitely shouldn't be necessary. We are definitely missing something. Can you post the full Web.config that causes the problem (with any passwords redacted)?
The only thing that jumps out at me is that there are a bunch of unmatched "<"s. I'm not sure if they are actually in your Web.config or if it some sort of posting artifact.
I think to diagnose the behavior you are describing, I'm really going to need a small test app that I can use to reproduce it. Can you email me (dean at brettle dot com) with an URL that I can use to download such an app?