At present I have removed Proxy from my set up and have directly connected my host to AD (IIS server) 

I have configured "raduser" on it

I have added my host IP as its RADIUS client

and on issuing following command

eapol_test -c /tmp/eapol.conf -a 192.168.7.40 -p 1812 -s testing123

My home server is an Microsoft IIS server, all I get from its logs is following: 

127.0.0.1,raduser,09/06/2010,18:42:57,IAS,ROOTTESTLABAD,4128,192.168.6.134,4,127.0.0.1,31,02-00-00-00-00-01,12,1400,61,19,77,CONNECT 11Mbps 802.11b,4108,192.168.6.134,4116,0,4155,1,4154,dot1x,25,311 1 192.168.7.40 09/06/2010 13:08:43 6,4129,MYTEST\raduser,4127,5,4149,test-dot1x,4132,MD5-Challenge,4130,mytest.com/Users/raduser,4136,1,4142,0

127.0.0.1,raduser,09/06/2010,18:42:57,IAS,ROOTTESTLABAD,4128,192.168.6.134,25,311 1 192.168.7.40 09/06/2010 13:08:43 6,4132,MD5-Challenge,4130,mytest.com/Users/raduser,4149,test-dot1x,4108,192.168.6.134,4116,0,4127,5,4155,1,4154,dot1x,4129,MYTEST\raduser,4136,3,4142,19

When I repeat same test with freeRADIUS as my home server everything works fine.

I have run out of ideas please guide me. 

Thanks,

Chidanand