Transfer's from IVM back into the "Merlin" ksu/pbx were failing, the pbx was not detecting switch hook / DTMF tones. Do not configure the analog port for a data device because this prevents all "short codes" from being accepted in addition to preventing call waiting. Set analog port to voice. All Lucent/Avaya systems use short codes to perform desired action, on Merlin/Legend/Magix #55 is the same as pressing the 'Transfer' button on a key telephone. Thus to perform a transfer IVM does a ,#55, + Extn. I.e. ,#55,500 - Transfer to Oper @ x500.
Other misc short codes #00 - programming, #58 - Hold, #* - Pickup Held Call, #54 - Turn off Voicemail Light, #50 - Recall (flash hook on outbound line -PSTN),
All short codes on the IP Office PBXs can be customized. I have found that regardless of IVM, a transfer via a short code works better than flash hook signaling.
Hope this helps somebody.