I am having exactly same issue... after enabling some debug logging I can see this:
22:56:39.421 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
22:56:49.484 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
22:56:59.547 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
22:57:29.624 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
22:57:49.752 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
22:57:59.812 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
22:58:28.035 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
22:58:38.095 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
22:58:48.164 WARN [ReadWrite-0 Dispatcher]: - [PACKET SERVER] SM_CHAT_INIT
in the gameserver menu. It looks like the CLIENT does not talk to CHATSERVER at all! It only communicates with GAMESERVER.
I have tried Dwarf's newest edition and it did not make any difference so the problem must be in GAMESERVER code (which I have access to).
Anyone had this issue before?