I have not heard of any issues with negotiating a link related to that switch configuration. The driver version you are using is the latest, so no driver update will help. I will check with my contacts to see if I can find out anything that might be related and post anything I find out here.
Please check out my post at http://communities.intel.com/message/148594#148594. I am not sure if this will apply to your situation, but you might want to try disabling Power over Ethernet as an experiment to see if you can connect with auto negotiate. Let me know what you find out.
I setup a 2960G with the same configuration and it worked fine.
I also tried using a Cross-Over cable with the 2950, and it still didn't work. (not that I expected it to)
The 2960 is an auto-sensing 1000/100/10Base-T Switch and the 2950 is nonauto-sensing and only has 100/10Base-T ports for the PCs.
What is the client OS?
Windows 7sp1 32 bit & 64bit.
Our engineers have tracked this issue down to an issue with the way the switch negotiates the speed. When this switch was manufactured, a "reserved" bit in the Ethernet negotiation was apparently used for proprietary purposes. Using this reserved bit is not an issue when communicating with 100 Mbps adapters, but causes an issue with gigabit negotiation.
There is another potential workaround that would allow you to keep the "down-when-looped" configuration. You could force the port speed to 100 Mbps to bypass the gigabit negotiation issue.
In the lab we got these results when manually configuring the speed and duplex settings:
Setting speed to 100 and duplex to full on the switch does establish a link even with down-when-looped enabled, however, the connection shows as 100/half on the client side when the client speed and duplex is set to auto.
Configuring 100/full on both sides shows a 100/full duplex connection.