We have seen this issue with the verification step with several other developers. Just so that I'm aware of where in the process everything breaks...you are given a file name and contents, upload that where requested to your server, click to verify domain and it says "Unable to verify domain"?
If so, can you provide all information that you are adding to create the OAuth application (a screenshot will work if you'd like to post that)? That would be the application url, domain url, app name, etc.
Jonathan LeBlanc Senior Software Engineer Yahoo! Developer Network Twitter: jcleblanc