One thing that "might" be an issue is to have more than one shipping option for UPS. I know the module will work with UPS & Flatrate because I have a live production site running them both... However, the ONLY UPS shipment option I have enabled is "UPS Ground". I don't give an option for next day air, 3 day etc. Can you try doing just UPS Ground and see if it will take? I'm curious from a troubleshooting standpoint as that is one thing that we (myself and the programmer) never tested when creating the module. (Not sure if this is an issue with FedEx yet...)
Also, are you having any issues with putting only a flatrate product into the cart and it not pulling the rate specified at the product? joshpodcast let me in on his site and sure enough, you can set the flat rate of the product to $10.00 but when you checkout, it is $0.00 (the default rate) Just wanting to see if you confirm this.