Does not work with realvnc...
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It does for me! RealVNC is my server of choice both on Windows and XP (mostly because it lets me try out the latest encoding I've added and is more compliant to the standards - but generally, when I'm not tweaking vncviewer code, I use tightVNC on windows, RealVNC on linux and OSXVnc on Mac).
How about a little more detail....
For example, run "teakettle 2>trace.txt" and send me trace.txt, or just teakettle on its own from the console and let me know what it prints out, or what operating system is the server on, what screen res and colour depth its using, whether it crashed or failed to connect, whether you were using 0.5 and it used to work with previous versions, etc.
Then I may be able to help 8^).