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Just like you have your mongrel servers set up, you'll also need to have a DRuby process set up (note that your DRuby memory counts against the memory allocation on your account, you will probably need to give up a mongrel process in order to run druby).  You'll also need to use one of the mongrel ports assigned to you (a 5-digit port that starts with a '4')

First, set up your configuration for mongrel into config/mongrel_upload_progress.conf.  Remember to replace the port number (shown here as 4***9)

uri "/", 
  :handler => plugin("/handlers/upload", 
    :path_info => '/files/upload', 
    :drb => 'druby://0.0.0.0:4***9'), 
  :in_front => true

Create a file in your lib directory called 'upload.rb'
This ruby file is an independent server that is totally separate from your rails application.  Remember to replace the port number again.  In the file, put:

require 'rubygems'
require 'drb'
require 'gem_plugin'
GemPlugin::Manager.instance.load 'mongrel' => GemPlugin::INCLUDE
DRb.start_service 'druby://0.0.0.0:4***9', Mongrel::UploadProgress.new
DRb.thread.join

To start the druby server:

ruby ~/path/to/app/lib/upload.rb

You can see it running with:

ps aux

And stop it with:

kill (PROCESSID)

All this documentation and more is available from:
http://mongrel.rubyforge.org/docs/upload_progress.html

Oh thank you. Hmmm it seems that when I run ruby lib/upload.rb in the or ruby  ../appname/lib/upload.rb
It just sticks and never gives me command prompt anymore.

You might try

ruby lib/upload.rb &

But I don't know if the process will stay resident when you log out of your ssh session.  Please try that and let me know.  The process has always backgrounded in the past automatically for me.

Sweet! such a tiny missed step, & crazy,, back to the books for me.
Now on that, can you recommend any extra tools I can use to test out how fast this thing really is going or helping?
I know we should buy some more memory for the server to run more mongrels,

But aside from that I have been unsuccessful in uploading files larger than 400+ megs yet.

Can you be more specific on what happens when you try uploading something larger than 400 megs?  Do you get any errors in your mongrel.log or production.log?