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For some reason, I can connect to the server I'm using when I test an application in flash, and the admin.swf for the server connects just fine.
When I telnet the ip and port of the server, I get:
<cross-domain-policy><allow-access-from domain='*' to-ports='9339' /></cross-domain-policy>

However, when I try running the swf of the app either from my computer or from an uploaded location, it doesn't work.

The policy file is being received during testing as well(when running in flash I see the trace of it being caught), but outside of flash all swfs except the admin just hang at 'connecting...'

Any ideas?

The IP is 64.252.103.12 by the way.

In order to load the poilicy file from the socket server you should use:
(using the right IP addr and port)
The above line of code should be added in your actionscript before you connect to the server

Also, please note that this will work only with flash player 7.0.19 and later.

You can read more about this in our docs (chapter 3.1)

I tried both that and the square brackets version. Also, my flash player runs the admin panel no problem(using flash player 8 ).