Hello Mo!
I feel your pain. In fact, I have felt it for the last year or so.
But, then I came across a work around.
1) Disconnect your ethernet and maybe your firewwire cables from your workstation.
2) Reboot.
3) Try your Compressor again.
It’s my understanding that Compressor gets confused with the network connections.
Now for my good news.
A few weeks ago, I discovered that my Compressor no longer needs the work around. Hummm? The only thing that I can think that has changed is that during a routine Apple software update via the web, Apple snuck in and fixed this problem for my Panther OS.
For me Compressor is now rock solid for me. In fact, I now export a QuickTime file first, drag this QuickTime file into Compressor, get it going and shove it to the background and go on working with something else. I keep editing on FCP.
Top of the day to you.
John The Video Man