It sounds like you are in escrow on a property for which there is not final approval from the bank. This could be good because it means that if the short sale is approved, you will not be in a multiple counter offer situation with other buyers. But . . . the waiting is very frustrating, I'm sure. If you really want to property, your real estate agent needs to have a "heart to heart" with the listing agent to find out what is going on. Here are some questions to ask: 1) Have you (the listing agent) confirmed that the bank have the short sale package? 2) Has the bank done the BPO? If so, on what date? 3) Has a negotiator been assigned?
If the bank has done the BPO, then it usually takes no more than 3 weeks for the bank to review the file and get back to the listing agent about the purchase price--whether it will be approved or not. If a negotiator has been assigned, communication should also have occured already. If the listing agent does not know the answers to these questions, then you may need to open your mind to the fact that this agent may not be able to complete the negotiatons in a timely manner.
Also, check with your agent to see if there is a Notice of Default or a Notice of Trustee's Sale on the property. The Trustee's Sale is the auction date, and you are buying a short sale . . . so the auction needs to be postponed. If nobody is conscious of these dates, then the property could be foreclosed right under your nose.
These may not be the answers that you wanted to hear, but I hope that I gave you some concrete information that could help you to make a more informed decision.