Yeah, PPPOE problems, LC may be right. There may be of other factors that are present as well.
First, does the ISP support a IPsec? Does the router you have support IPsec? I know a Linksys router is IPsec compliant, but the numbers so far of the types of routers that are IPsec compliant are somewhat low. Although, with large increase in such connection types as *DSL and cable, and the RFCs regarding IPsec standardization, the number of IPsec compatible routers will probably increase.
The nest question you may ask is are you using PPPOE as LC mentioned above? PPPOE will fragement packets and the frame size it uses is less than current standards. I think something like, around, I'm not really sure, 80 bits or so. That can have an effect of shutting you down as well. That information can be found by doing a search for PPPOE on net.
Basics, from what I understand is:
In order to be IPsec compliant,your client will have to make a connection to the gateway on 500/UDP. That is where you "key" is made. Then the client must be able to communicate with IP type 50/51( ESP and/or AH)over the wire.
Just some guesses and musings! At the end of the day all that really matters is was it fun!