Initially I was using a self-signed certificate to test my uploadify with https, surely it didnt work.
Then I tried the same with CA certificate from a third party and it does work partially. I implemented Uploadify with ASP .Net with IIS 7. First time upload always fail [either first for the day or may be session, not sure which one] with http 500, due an IO at BEGIN_REQUEST on IIS 7, but, subsequent uploads work smoothly.
This issue may be specific to IIS 7 and it may work with other web servers [Its not confirmed, as I didn't try on another].
BTW due time crunch I replaced uploadify with a similar silverlight project from codeplex. Just search for 'silverlight multi file upload' on codeplex, just in case if that helps.