After connecting the router for the first time (f/w 1.01), I successfully connected to the Internet. The default connect setting was set to "on demand". I then upgraded to f/w 1.03 b11 and changed it to connect "always".
Then I saw a successful connection made, but suddenly disconnect after less than 7 seconds. The router then tries to connect again and succeeds, but then is disconnected in a loop that goes on forever. During this time no clients can access the internet.
During this time I see in the routing table entries for 3 ppp interfaces (ppp1, ppp2, ppp3) when there should only be one (ppp0).
The ISP also told me they see something odd - there appear to be multiple L2TP connections at the same time from my account!
It seems that as the duplicate connections are made the previous ones (or new ones - I'm not sure) are dropped by the ISP and the router has to reconnect (or thinks it needs to reconnect but it is confusing the disconnect of a previous connection with the current connection and therefore tries to make yet another one).
The only way to fix this is to power off both the modem AND the router, then wait at least a minute for the ISP to close all the L2TP connections properly, then power up the modem, and once stable, power up the router. Thereafter it connects correctly and will continue to work correctly thereafter! It only seems to happen when the router is new (meaning that the MAC address seen by the ISP has just changed).
This appears to be a router bug, though there could be a problem at the ISP end too.