500 Internal Error - not mod_rewrite

[eluser]Unknown[/eluser]
Hi, hopefully this doesn't turn out to be something stupid - but i'm getting desperate.

Recently, I added a jquery modal login box to my site. Everything works correctly until I submit the form - i receive: POST http://www.mydomain.com/auth/login [HTTP/1.1 500 Internal Server Error 40ms]

To keep things simple, I just have the method echoing "OK". Nothing shows up in the log files.

Note: if i change "url:" in the js file to test.php and just put "echo 'OK';" in the test file, it works...

Any help would be greatly appreciated!

init.js

Code:

// When DOM is ready
$(document).ready(function(){

    // When the form is submitted
    $("#login-box > form").submit(function(){

        // Hide 'Submit' Button
        $('#sign-in').hide();

        // Show Gif Spinning Rotator
        $('#ajax_loading').show();

        // 'this' refers to the current submitted form
        //var str = $(this).serialize();
        var form_data = {
            username: $('#username').val(),
            password: $('#password').val()
        };

        // -- Start AJAX Call --
        $.ajax({
            type: "POST",
            url: "http://www.mydomain.com/auth/login",  // Send the login info to this page
            data: form_data,
            success: function(msg){
                $("#login-box").ajaxComplete(function(event, request, settings){
                    // Show 'Submit' Button
                    $('#submit').show();
                    // Hide Gif Spinning Rotator
                    $('#ajax_loading').hide();

                    if(msg == 'OK') // LOGIN OK?
                    {
                        var login_response = '<div id="logged_in">' +
                             '<div>' +
                             '<div>' +
                             '<img align="absmiddle" src="./images/ajax-loader.gif">' +
                             '</div>' +
                             '<div>'+
                             "You are successfully logged in! <br /> Please wait while you're redirected...</div></div>";

                        //$('a.modalCloseImg').hide();
                        $('#simplemodal-container').css("width","500px");
                        $('#simplemodal-container').css("height","120px");
                        $(this).html(login_response); // Refers to 'status'

                        // After 3 seconds redirect the
                        setTimeout('go_to_private_page()', 3000);
                     }
                     else // ERROR?
                     {
                         var login_response = msg;
                         $('#login_response').html(login_response);
                     }
                });
            }
        });
        // -- End AJAX Call --
        return false;
    }); // end submit event
});

function go_to_private_page()
{
    [removed] = 'http://www.mydomain.com/my_crib'; // Members Area
}