I checked the /etc/ppp/options file and all the PAP directives are commented out.
insmod worked. dmesg produces the line: "PPP MPPE Compression module registered" And finally, yes, I do have the line in the debug log: "sent [LCP TermReq id=0x2 "MPPE required but not available"]" just after the line: "MPPE required, but MS-CHAP[v2] auth not performed"