You say you're going from SunOS 5.6 to SunOS 5.8... the dump log show you're connecting to a SunOS 5.6 box... $host is set to the remote host, not the local host correct?
I noticed that in the dump log as well... $host is set to a named host - and I just double checked, and I had it set as a literal, no ' around the host name declaration - argh! Good catch, thanks - I finally have a successful log on!