UART1 on Beagleboard rev.C4

We are having a problem with UART1 - transmit works but cannot
receive. To narrow down the problem we performed loopback test on
UART1 (pin 9 to pin 15 on J5) and on UART2 (pin 6 to pin 8 on
expansion connector). Here is the status:

- UART3 working OK as console.
- UART2 tested with loopback OK.
- UART1 tested with rs232 cable to a computer (via voltage level
shifter and ST232). Could only make Tx work, while Rx didn't work
whatever the software configuration. Loopback test failed although we
could measure solid pulses on the Rx pin.

All tests were done without any hardware handshaking (RTS/CTS). The
port settings and mux settings for all UARTs were copied from the
working UART3.

The software used was Angstrom built via OpenEmbedded, git commit id
3f626eba5c24c1da731eace82a4797a6f0d0afd4.
Kernel used is that from recipe linux-omap-psp_2.6.32.bb (git source
git://arago-project.org/git/people/sriram/ti-psp-omap.git at commit
a6bad4464f985fdd3bed72e1b82dcbfc004d7869)

The kernel was built with OMAP3_MUX support, and patched enable
McSPI3, and to disable the DVI and camera (for UART1 pins). Also
debugfs was enabled in order to be able to switch mux settings without
recompiling and rebooting.

The tools used to test were:
cat /dev/ttyS0 (or 1 for UART2)
echo blah > /dev/ttyS0
stty (for changing the serial port settings)

I can provide full online access to the test board via Ubuntu machine.
Any help will be greatly appreciated. Thanks!

Radomir