I found out was was the problem.
I realized the problem was in the kernel of the http, because the POST did not even get to the IIS.
I allowed logging for http.sys (http://www.microsoft.com/technet/prodtechnol/WindowsServer2003/Library/IIS/51d3f209-769f-4a77-aba1-52f2e052209c.mspx?mfr=true)
and saw the the error was because of timeout.

I then looked into it more and more, and saw that the firewall was preventing the call because it figures the length of the URL as malicious.
I tested it when I disabled the URL checking on the FireWall, and it worked fine.
However, I cannot keep the firewall open (obviously) so I was hoping you have something that can be done to help on this issue.

Thank you very much,
ER