The 3.5 version says it is for Server 2012 Hyper-V, and the VHD file does not show up in Hyper-V when trying to import it, so I assume it is not compatible?
I also have this same issue currently using Ruckus vSZ located in Azure. Our config is very similar to yours and the issues are also identical to yours. The delay causes some devices to never get the Terms page and so they do not get internet access....