Hi,
I just tried the same configuration and it works properly. Since you're not using any end of string character, any read operation will return after the specified timeout with the data in the buffer. I don't know what could be happening, but I can give you some testing ideas.
It seems that you are already doing a loopback test. Try doing the test using hyperterminal. Here's a document that describes the process:
http://zone.ni.com/devzone/conceptd.nsf/webmain/D48BA43C59B60277862569EE000501FD?opendocument&node=DZ52363_US
Using hyperterminal will show if there's any hardware or connection problems.
If not already doing it, do a loop backtest with the sample program or the Test panel of the ActiveX control.
Hope this helps.
DiegoF.