Hmm!! very interesting..

I changed the code replacing the UNC path with a local path:

Code:
 	$x = open(3, ".\gd.txt")
	? "Open file " + $x
	$line = readline(3)
	? "First read: " + @ERROR
	while @ERROR = 0
		? $line
		$line = readline(3)
	loop
	? "Done"
	$x = close(3)


... and that works!

It obviously doesn't like BIG files over UNC.. Unless there's something wrong with my system. I have tried a smaller text file over UNC and it displayed it no problem.

Any ideas anyone?