Why is the iSCSI MPIO Setup not working

It turns out that the issue was related to the switch. When we finally replaced the HP with a new Dell switch we were able to get multi-gigabit speeds as soon as everything was plugged in.

Most QNAP SANs do not support failover (they don't implement iSCSI3-PR; there's a reason they're cheap). What model do you have?

Edit:
The really short version of connecting to an iSCSI target in Server 2008 (or R2) with MPIO.

1. Enable the MPIO feature.
2. Run mpiocpl, on the Discover Multi-Paths tab; check Add support for iSCSI devices; you might have to reboot your computer. If this whole tab is grayed out, it's already enabled.
3. Run iscsicpl, on the Discovery tab add a Discovery Portal; pop an IP of the Target in.
4. Go to the Targets tab; select the appropriate target, click connect. Check both boxes and click OK.
5. Select the Connection, click Devices, click the MPIO button. It should show one active session. Close the details window and the device window.
6. Select the Connection, click Properties. One session should currently appear. Check the box next to the session and click MCS. Note the IPs used. Close the MCS window. Click Add session, check both boxes, click Advanced. Select the IPs from the drop downs that are not already being used. Click OK twice. If your target only has one IP, it gets re-used; this will depend on how your iSCSI Target works.

You should now be able to see two session; if you check the box next to one of them, then MCS it should show the IPs (each one having different IPs).

Note this setup is for MS's iSCSI Software Initiator only; if you use other software, or a NIC with iSOE the process is different (usually). Depending on how your iSCSI Target works you might have the same destination target for both sessions. If your target has many connections (common on high end units) you may or may not have to establish a session for each; consult the documentation that came with your target.