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What runlevel do instances start in?
If you use one of the Xen provided kernels to boot your EC2 instance it will default to run level 4. However if you use PV-GRUB to boot your own kernel inside of the instance, the instance will then default to the internally configured run level.
Are there any special requirements to use FTP?
The File Transfer Protocol (FTP) has a PORT command by which a client sends its address back to the server. The server then connects to the client at that address to send the file data. If the client looks up its own internal address and sends this to the server, the connection will fail. In this specific case, there are two solutions to the problem. First, configure the client to send its public IP address. Second, the client can use "passive FTP" which makes connections only to the server, rather than from the server to the client. In general, applications which encode local addresses and port numbers in data sent to external servers might have problems with NAT. Care must always be taken to send the public address, rather than the internal one.
We recommend using passive mode unless it is not supported by the FTP server.