Cisco PIX 7.0.1 to Watchguard V60 VPN Tunnel

I am upgrading all my compaines firewalls with the new 7.0 on all our pixes. We have one enviroment with a Watchguard V60. With version

6.3.4 of the pix software, I have successfully created a VPN tunnel from the v60 to the pix many times in the past. Now that my test PIX has been upgraded to 7.0, I have been unable to do so and it is a major hold up to my project...but what isn't a hold up right? See partial packet dump below... Keeps saying PAYLOAD_MALFORMED where i have it marked with
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jbuice
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try:

3des/sha1 for phase 1 and phase 2 DH Group 2 make sure the watchGuard uses the same make sure no Perfect Forward Secrecy

From the PIX, give us the outpouts of

debug crypto isak debug crypto ipsec sh crypto isak sa det

/edgar

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"Edgar® du

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