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"Didn't receive 200 OK from remote server. (HTTP/1.0 500 Internal Server Error)

There, you answered your question yourself, you just haven't realized it yet ;)

The Joomla! XML-RPC service (web services) is actually yet another application built on top of the Joomla! Framework API - the other three being the front-end, the back-end and the installer. Here's the problem. Most extension developers are oblivious to this fact and never test their plug-ins against the XML-RPC services application!

Given this background info, I now turn to my crystal ball and guess the problem: you have installed a bridge between your site and a non-Joomla! forum or photo gallery application. The bridge installs authentication and user plug-ins which are incompatible with the XML-RPC services layer. Unless you turn them off, you can't access the Joomla! XML-RPC functions. Do note that this problem happens very early in the Joomla! side of the code, long ago before plg_jpremote's code is loaded. Which means that it's basically beyond my ability to put workarounds in the code so as to cope with this messy situation.

Furthermore, using your IP address instead of the host name doesn't work. Chances are that you're on shared hosting. Shared hosting servers have one IP address and use a technique called "virtual hosting" to direct multiple domain names to this single IP. The web server reads the domain name in the HTTP request headers and knows which site's pages to serve. If you use just the IP, this information is missing from the headers and the web server serves the pages of the default site which eventually causes it to throw a 404 not found error. Bottom line: use your domain name, not the IP.

Maybe you should check the existence of .htaccess files which cause a failed redirection either in the root of this site, or in the xmlrpc directory of this site. Error 500 is either caused by a PHP bug or failure to parse .htaccess. In very rare occasions it can be caused by malformed php.ini files inside the xmlrpc directory as well.

This looks like the standard Joomla! .htaccess, which shouldn't cause any problems. I am sure there is something going on with an installed plugin. In extreme cases of despair - like this one - you may want to use the "shotgun debugging" method, i.e. start disabling non-core plug-ins until you find the culprit.

You can also try accessing directly the /xmlrpc/index.php page on your browser. You should see an XML document mentioning an error in line 0. This is normal and means that your XML-RPC server is working. If you get an HTTP 500 error, you have to do the "shotgun debugging" chore. If not, you can try uninstalling and reinstalling plg_jpremote, in case you were using an older version of it (highly unlikely, but you never know).

The blank page is not normal. It is a hidden error. Whenever a fatal PHP error happens, it's standard practice to display nothing in the browser, but send an HTTP error header nonetheless. This means that your browser shows a blank page and Remote (which can read the invisible headers) reports the error.

Since there is no conflicting plugin, I can only assume that some files in the xmlrpc directory are corrupt, or you have installed a component on your site which "hacks" core files, e.g. JACL. AFAIK, ACL components and XML-RPC don't mix very well (they're like drinking and driving).

If all else fails, you'll have to wait about two months for me to get ready the next version of Remote, which won't use the XML-RPC plugin. More specifically, I will be using a simple JSON web service embedded in the component, slashing the external requirements and conflict potentials.

Thanks for your kind words :) I'm working day and night to make the release by February 20th!