I have similar problems, but mine won't even get that far. I'm not sure if I set up WvDial correctly or not, but both it and chat scripts stop at the same place. It can't authenticate it, and I have tried several configurations of chat and WvDial.
Any help is appreciated.
Note that this has already stumped people on two other lists, so I don't have my hopes too high. You don't need to buy Internet access to use free Internet e-mail.