The following looks to be the same problem.

If I pause a track on a squeezebox for less than 25 seconds then restart
the track then it plays on correctly.

However, If I leave the Squeezebox in pause for more than 25 seconds,
then try to unpause I get a garbled stream. If I skip back to the beginning
of the track (or to any other track) then it starts playing perfectly.

I've tried with a number of music formats: WAV, MP3, FLAC, OGG, and I get
the same problem with all of them. The necessary pause duration is pretty
exact and seems to be codec independent.

Initially I thought that it might be related to the screensaver, so
I tried disabling this, and also tried navigating around the menus
while paused. This made no difference at all.

I've also tried the server software installed on two different PC's
(WinXP Home and Win2K) with identical results.

On both the server window and the squeezebox the status is shown as playing,
and the elapsed time keeps counting up, but nothing sensible comes out.
Going in and out of pause quickly doesn't resolve the garbled stream
once it has happened.

Finally I've tried streaming from the same server to another PC running
WinAmp. This seems to work nicely, and I've paused tracks for over half
an hour with no problems when commencing play.

All of this seems to indicate either a Squeezebox (firmware?) issue or
something strange to do with the networking. 

My NIC on the WinXP machine is a Realtek RTL8139/810x Family Fast Ethernet
NIC, with the latest drivers (6.11). I don't have my laptop handy to
check it's network chip, but I suspect it's different.

I'm running SlimServer 5.1 with Squeezebox firmware 7 (I think).

fixed for v.20

Still have a pause problem - resuming from pause works for about 4-5 seconds 
then appears to jump back about 2-3 seconds before playback stops, the counter 
stops counting.  Track can be restarted from the beginning no problem.

Running on XP Pro SP1, SB firmware .21, server version 5.14