Hey Milwaukee:
Yes, we have all had our difficulties dealing with these sorts of offers. I've found that the short sale process is absurd and many sellers haven't been pre-approved for short sale. The foreclosure side of the market seems to move much more swiftly.
I have sold both and while the short sale took many months and challenges and answers similar to what you stated, the foreclosure took on 2 days and a closing in 30 days.
The banks have ever changing policies and are inundated with challenges so unless you find a broker and agent who are familiar with the dealings of distressed and bank owned properties; you'll be "hanging in there" for a long time and with no answers.
Let me know if you'd like a contact of a broker/agent in Milwaukee to help you sort out the options.
Best regards,
Owen Zweiback PA, GRI, Realtor, e-Pro
Coldwell Banker Residential Real Estate
800-547-3019 Toll Free Office
239-269-3077 Cell - Wed Nov 26, 2008