OK, I figured it out.

Problem: File size or type is incompatible with the IPFS system. My original file was a 2Gb .avi file. I converted it to 800Mb .mp4 and had no problem uploading.

Solution: Convert your file to .mp4 or other compatible file type and keep the size below 1Gb. I use Bigasoft Video Converter and Adobe Media Encoder CS4. Both are widely available.

Result: I uploaded the converted file in minutes with no issues.

Hope that helps everyone. Cheers!