It should be noted that the code for .blend file support is a very simple command line and in preview_preprocessing.php around line 399. It was also developed prior to blender 2.5 which was a total rewrite, although I recently tested it with blender 2.5+ on the server and it worked.
So it looks like a problem on the blender side for you.
Is it possible 263 refers to a blender file version? 2.63 would make sense if it's a version compatibility issue because they are at 2.65 now, though .blend files are amazingly forward and backward compatible last I knew, so that's just a guess.
Also, can you render the file with F12 from inside your server's Blender?