This can be a couple of things:
Your giving out the wrong IP
check
www.whatismyip.com for your internet IP. (this can be completely different from the one you see in the Palace server log)
Your firewall
Make sure your firewall allows the PAlace server to act as a server and make connections on port 9998 and 9990
Network
Your on a home network and the Palace server is not on the main computer: this will not work
Check the User questions forum there is a Sticky on top of the topic list wich explains DSL / connection problems.
Good luck.