iptables issue

Hi all,
I'm trying to set up a virtual machine to act as a Windows host firewall.
The basic idea is that the guest OS is configured on a sub with a router and the host is configured on another sub with the guest.
I found this ancient iptables script and I did some minor mods to fit my network setup, bot for some reason it won't work. It looks like that only the default DROP policy works and nothing else. I'm pretty sure I've used this scipt some years ago and it worked flawless.
Any ideas?

Iptables 1.4.14 on Slack 14.

#!/bin/sh
#
# rc.firewall - UTIN Firewall script for Linux 2.4.x and iptables
#
# Copyright (C) 2001 Oskar Andreasson <bluefluxATkoffeinDOTnet>
#
# This program is free software; you can redistribute it and/or modify
# it under the terms of the GNU General Public License as published by
# the Free Software Foundation; version 2 of the License.
#
# This program is distributed in the hope that it will be useful,
# but WITHOUT ANY WARRANTY; without even the implied warranty of
# MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE. See the
# GNU General Public License for more details.
#
# You should have received a copy of the GNU General Public License
# along with this program or from the site that you downloaded it
# from; if not, write to the Free Software Foundation, Inc., 59 Temple
# Place, Suite 330, Boston, MA 02111-1307 USA
#

###########################################################################
#
# 1. Configuration options.
#

#
# 1.1 Internet Configuration.
#

INET_IP="10.0.0.100"
INET_IFACE="eth0"

#
# 1.1.1 DHCP
#

#
# 1.1.2 PPPoE
#

#
# 1.2 Local Area Network configuration.
#
# your LAN's IP range and localhost IP. /24 means to only use the first 24
# bits of the 32 bit IP adress. the same as netmask 255.255.255.0
#

LAN_IP="10.0.1.1"
LAN_IP_RANGE="10.0.1.0/16"
LAN_BCAST_ADRESS="10.0.1.255"
LAN_IFACE="eth1"

#
# 1.3 DMZ Configuration.
#

#
# 1.4 Localhost Configuration.
#

LO_IFACE="lo"
LO_IP="127.0.0.1"

#
# 1.5 IPTables Configuration.
#

IPTABLES="/usr/sbin/iptables"

#
# 1.6 Other Configuration.
#

###########################################################################
#
# 2. Module loading.
#

#
# Needed to initially load modules
#

/sbin/depmod -a

#
# 2.1 Required modules
#

/sbin/modprobe ip_tables
/sbin/modprobe ip_conntrack
/sbin/modprobe iptable_filter
/sbin/modprobe iptable_mangle
/sbin/modprobe iptable_nat
/sbin/modprobe ipt_LOG
/sbin/modprobe ipt_limit
/sbin/modprobe ipt_state

#
# 2.2 Non-Required modules
#

#/sbin/modprobe ipt_owner
#/sbin/modprobe ipt_REJECT
#/sbin/modprobe ipt_MASQUERADE
#/sbin/modprobe ip_conntrack_ftp
#/sbin/modprobe ip_conntrack_irc

###########################################################################
#
# 3. /proc set up.
#

#
# 3.1 Required proc configuration
#

echo "1" > /proc/sys/net/ipv4/ip_forward

#
# 3.2 Non-Required proc configuration
#

#echo "1" > /proc/sys/net/ipv4/conf/all/rp_filter
#echo "1" > /proc/sys/net/ipv4/conf/all/proxy_arp
#echo "1" > /proc/sys/net/ipv4/ip_dynaddr

###########################################################################
#
# 4. rules set up.
#

######
# 4.1 Filter table
#

#
# 4.1.1 Set policies
#

$IPTABLES -P INPUT DROP
$IPTABLES -P OUTPUT DROP
$IPTABLES -P FORWARD DROP

#
# 4.1.2 Create userspecified chains
#

#
# Create chain for bad tcp packets
#

$IPTABLES -N bad_tcp_packets

#
# Create separate chains for ICMP, TCP and UDP to traverse
#

$IPTABLES -N allowed
$IPTABLES -N icmp_packets
$IPTABLES -N tcp_packets
$IPTABLES -N udpincoming_packets

#
# 4.1.3 Create content in userspecified chains
#

#
# bad_tcp_packets chain
#

$IPTABLES -A bad_tcp_packets -p tcp ! --syn -m state --state NEW -j LOG \
--log-prefix "New not syn:"
$IPTABLES -A bad_tcp_packets -p tcp ! --syn -m state --state NEW -j DROP

#
# allowed chain
#

$IPTABLES -A allowed -p TCP --syn -j ACCEPT
$IPTABLES -A allowed -p TCP -m state --state ESTABLISHED,RELATED -j ACCEPT
$IPTABLES -A allowed -p TCP -j DROP

#
# TCP rules
#

$IPTABLES -A tcp_packets -p TCP -s 0/0 --dport 21 -j allowed
$IPTABLES -A tcp_packets -p TCP -s 0/0 --dport 22 -j allowed
$IPTABLES -A tcp_packets -p TCP -s 0/0 --dport 53 -j allowed
$IPTABLES -A tcp_packets -p TCP -s 0/0 --dport 80 -j allowed
$IPTABLES -A tcp_packets -p TCP -s 0/0 --dport 113 -j allowed

#
# UDP ports
#

#$IPTABLES -A udpincoming_packets -p UDP -s 0/0 --source-port 53 -j ACCEPT
#$IPTABLES -A udpincoming_packets -p UDP -s 0/0 --source-port 123 -j ACCEPT
$IPTABLES -A udpincoming_packets -p UDP -s 0/0 --source-port 2074 -j ACCEPT
$IPTABLES -A udpincoming_packets -p UDP -s 0/0 --source-port 4000 -j ACCEPT

#
# ICMP rules
#

$IPTABLES -A icmp_packets -p ICMP -s 0/0 --icmp-type 8 -j ACCEPT
$IPTABLES -A icmp_packets -p ICMP -s 0/0 --icmp-type 11 -j ACCEPT

#
# 4.1.4 INPUT chain
#

#
# Bad TCP packets we don't want.
#

$IPTABLES -A INPUT -p tcp -j bad_tcp_packets

#
# Rules for special networks not part of the Internet
#

$IPTABLES -A INPUT -p ALL -i $LO_IFACE -s $LO_IP -j ACCEPT
$IPTABLES -A INPUT -p ALL -i $LO_IFACE -s $LAN_IP -j ACCEPT
$IPTABLES -A INPUT -p ALL -i $LO_IFACE -s $INET_IP -j ACCEPT

#
# Rules for incoming packets from anywhere.
#

$IPTABLES -A INPUT -p ALL -d $INET_IP -m state --state ESTABLISHED,RELATED \
-j ACCEPT
$IPTABLES -A INPUT -p TCP -j tcp_packets
$IPTABLES -A INPUT -p UDP -j udpincoming_packets
$IPTABLES -A INPUT -p ICMP -j icmp_packets

#
# Log weird packets that don't match the above.
#

$IPTABLES -A INPUT -m limit --limit 3/minute --limit-burst 3 -j LOG \
--log-level DEBUG --log-prefix "IPT INPUT packet died: "

#
# 4.1.5 FORWARD chain
#

#
# Bad TCP packets we don't want
#

$IPTABLES -A FORWARD -p tcp -j bad_tcp_packets

#
# Accept the packets we actually want to forward
#

$IPTABLES -A FORWARD -p tcp --dport 21 -i $LAN_IFACE -j ACCEPT
$IPTABLES -A FORWARD -p tcp --dport 80 -i $LAN_IFACE -j ACCEPT
$IPTABLES -A FORWARD -p tcp --dport 110 -i $LAN_IFACE -j ACCEPT
$IPTABLES -A FORWARD -m state --state ESTABLISHED,RELATED -j ACCEPT

#
# Log weird packets that don't match the above.
#

$IPTABLES -A FORWARD -m limit --limit 3/minute --limit-burst 3 -j LOG \
--log-level DEBUG --log-prefix "IPT FORWARD packet died: "

#
# 4.1.6 OUTPUT chain
#

#
# Bad TCP packets we don't want.
#

$IPTABLES -A OUTPUT -p tcp -j bad_tcp_packets

#
# Special OUTPUT rules to decide which IP's to allow.
#

$IPTABLES -A OUTPUT -p ALL -s $LO_IP -j ACCEPT
$IPTABLES -A OUTPUT -p ALL -s $LAN_IP -j ACCEPT
$IPTABLES -A OUTPUT -p ALL -s $INET_IP -j ACCEPT

#
# Log weird packets that don't match the above.
#

$IPTABLES -A OUTPUT -m limit --limit 3/minute --limit-burst 3 -j LOG \
--log-level DEBUG --log-prefix "IPT OUTPUT packet died: "

######
# 4.2 nat table
#

#
# 4.2.1 Set policies
#

#
# 4.2.2 Create user specified chains
#

#
# 4.2.3 Create content in user specified chains
#

#
# 4.2.4 PREROUTING chain
#

#
# 4.2.5 POSTROUTING chain
#

#
# Enable simple IP Forwarding and Network Address Translation
#

$IPTABLES -t nat -A POSTROUTING -o $INET_IFACE -j SNAT --to-source $INET_IP

#
# 4.2.6 OUTPUT chain
#

######
# 4.3 mangle table
#

#
# 4.3.1 Set policies
#

#
# 4.3.2 Create user specified chains
#

#
# 4.3.3 Create content in user specified chains
#

#
# 4.3.4 PREROUTING chain
#

#
# 4.3.5 INPUT chain
#

#
# 4.3.6 FORWARD chain
#

#
# 4.3.7 OUTPUT chain
#

#
# 4.3.8 POSTROUTING chain
#