On the proxy machine,
# LOG, then DROP everything (last 2 lines in iptables)
iptables -A INPUT -j LOG
iptables -A INPUT -j DROP
on the input side (LAN). Usually logs to /var/log/messages. Should show if ftp attempts are even getting that far.
Once you've fixed that, you can add same rules to the output chain to see if the requests make it out to the internet.
Similarly on the rtn pkts from the internet.
iptables logging allows you to see exactly how far your pkt gets, and what the problem was, if any.
If you want a different logfile used: http://www.cyberciti.biz/tips/force-...-log-file.html