I've figured out that it should be the second configuration - with the
": on".

After using firebug to see what was going on in the blank iframe, I
saw service login requests. So I logged out and logged back in, and it
started working.

I'm guessing that the new accounts system is introducing some
wierdness. If you have this problem, log in to the appengine admin
again and see if it fixes it.

Cheers
Greg.

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