User Sync Not working

I'm trying to sync between two wordpress installs.

Both are running 3.3.2 and are on the same server (but different databases). Connected to each other correctly via user sync plugin but nothing's happening. Just to note, I'd like to require users to only register at the master site so that people only register from there.

Error file from master site:
[2012-05-17 02:05:44][M] 0-10 - ajax actions***
[2012-05-17 02:05:44][M] 07 - added new sub site***
[2012-05-17 02:05:45][M] 0-10 - ajax actions***
[2012-05-17 02:05:45][M] 08 - count of users= 631;;***
[2012-05-17 02:05:45][M] 02 - sending request - url=http://example.com/subsite/wp-admin/admin-ajax.php?action=user_sync_api;;***
[2012-05-17 02:05:45][M] 03 - sending request - response= <!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd">
<html>

<head>
<title>Access Denied.</title>
<link rel="stylesheet" target="_blank" href="http://example.com/subsite/wp-admin/css/install.css" type="text/css" />
</head>

<body id="error-page">

<p>Access Denied. Your site administrator has blocked your access to the WordPress back-office.</p>

</body>

</html>

;;***
[2012-05-17 02:05:45][M] 06 - checking key false;;***

Log from subsite:
[2012-05-17 02:00:32][S] 01 - new subsite conection - central_url=http://www.mastersite.com;; replace_user=0;; overwrite_user=0;;***
[2012-05-17 02:00:32][S] 02 - sending request - url=http://www.mastersite.com/wp-admin/admin-ajax.php?action=user_sync_api;;***
[2012-05-17 02:00:34][S] 03 - sending request - response=ok;;***
[2012-05-17 02:00:34][S] 01_2 - sync users for new subsite***
[2012-05-17 02:00:34][S] 02 - sending request - url=http://www.mastersite.com/wp-admin/admin-ajax.php?action=user_sync_api;;***
[2012-05-17 02:00:36][S] 03 - sending request - response=ok;;***
[2012-05-17 02:03:47][S] 02 - sending request - url=http://www.mastersite.com/wp-admin/admin-ajax.php?action=user_sync_api;;***
[2012-05-17 02:03:48][S] 03 - sending request - response=ok;;***
[2012-05-17 02:05:43][S] 01 - new subsite conection - central_url=http://www.mastersite.com;; replace_user=0;; overwrite_user=0;;***
[2012-05-17 02:05:43][S] 02 - sending request - url=http://www.mastersite.com/wp-admin/admin-ajax.php?action=user_sync_api;;***
[2012-05-17 02:05:44][S] 03 - sending request - response=ok;;***
[2012-05-17 02:05:44][S] 01_2 - sync users for new subsite***
[2012-05-17 02:05:44][S] 02 - sending request - url=http://www.mastersite.com/wp-admin/admin-ajax.php?action=user_sync_api;;***
[2012-05-17 02:05:45][S] 03 - sending request - response=ok;;***

Any help would be greatly appreciated!!