Dear Unknown user (or LoopBack, whichever you prefer),
Contrary to your assertion that the server's stunnel connection is listening on port 500, the small piece of the stunnel.conf you have provided says otherwise.
---Stunnel.conf SERVER--- .. [inet] accept = 127.0.0.1:123 <--------- this means stunnel is listening on port # 123......not 500 connect = 127.0.0.1:80
Also, as you have specified the server's localhost IP address (127.0.0.1) on the accept, __no__ other computer can get to the stunnel server, as it is only expecting stunnel traffic from it's own virtual address, not any other computer.
If you setup the server as follows, it will accept stunnel connections from any computer on port 123 (or change this to whatever port number you want....at both ends) and send the traffic to its own port 80. I assume that anything hitting port 80 on this box is then "socksified" and forwarded elsewhere.
---Stunnel.conf SERVER--- .. [inet] accept = 123 < connect = 127.0.0.1:80
The client configuration looks fine to me.
I second Ian's comments.
Regards,
John Boxall