Code:
[LoginServer]
Host=127.0.0.1:5999
That's what you have in your host file? If you're using the public loginserver and trying to connect using that, it won't work.
Try this:
Code:
[LoginServer]
Host=login.eqemulator.net:5999
Also, when the "0: sleeping" changes it means it's looking at a zone like this 7004: tutorial, 1 clients". It is not an issue for this to not be sleeping (unless no one is actually online).
Also, may I see your eqemu_config.xml, with the username and password to your database removed?