A: 

Well, I assume this is running on a windows server so I dont know the equivalent to htop but I bet you there is a deadlock somewhere in the database/session code and you should be able to check the thread state to see if every thread is in the waiting state.

Welcome to StackOverflow rdickie ;-)Just discovered that it works fine with SQLite. Starting to think it's a DB connectivity issue but still need to narrow it down further.
Scott Muc
A: 

I fixed the hang by switching to the LinFu proxyfactory.factory_class. Have no idea why this works and Castle doesn't. Going to learn more about Dynamic Proxies and figure out what kind of bug report I should submit.

Scott Muc