Hi @tech-otaku,
I hope you’re well today! 🙂
Sorry you’ve had some trouble there, I suspect it might have to do with Yahoo’s intermittent service currently, as reported here:
http://wordpress.org/support/topic/http-error-36
It might help to set a lower timeout as noted on that thread.
On that note, have you tried a regular smush operation?
If you receive a 500 error with that, could you please try turning on debugging in WordPress as detailed here and let us know what that turns up?
http://premium.wpmudev.org/blog/debugging-wordpress-how-to-use-wp_debug/
Looking forward to seeing that sorted for ya! 🙂
Thanks,
David