Hopefully someone sheds light on this, as I am getting the same problem.
It downloads about 25 patches then I get the Server is not Responding.
Eventually it times out with a similar message as the OP
Processed 25 out of 1056 items.
AdobeUpdateServerSetupTool returned with code: 5.
Note: This has only started happening since we upgraded to AUSST 3.
As a test before I left last night I kicked off an incremental via AUSST 2, 18 hours later it is still downloading, it appears it is rebuilding the entire library.
As version 2 has made it further then version 3 has it would appear there is either an error somewhere or a setting needs to be changed when using version 3.