> We have been using -x option to replace external html links 
> by error pages. I have noticed that everytime, when the 
> engine comes across a link for the first time it puts the 
> external link directive but after that it just 
> puts '../../' for the same link on the same page or any 
> other page in the hierarchy.

Bug confirmed.  My test page below.  Three identical links, first one will
correctly be external while following two will change to a heap of "../"s

<http://www.kauler.com/misc/httrack-test-repeatexternal.htm>