Hiawatha is perfectly capable of serving large files. I've tested it with files of hundreds of megabytes. How did you install Hiawatha? Did you use the .deb file or did you compile it yourself?
I've tested the URL you posted in your second message, but I was able to download the file.
# wget http://k7hkl.webhop.net/test2.html
--07:53:44-- http://k7hkl.webhop.net/test2.html
=> `test2.html'
Resolving k7hkl.webhop.net... 71.36.20.176
Connecting to k7hkl.webhop.net|71.36.20.176|:80... connected.
HTTP request sent, awaiting response... 200 OK
Length: 7,480 (7.3K) [text/html]
100%[========================================================>] 7,480 19.80K/s
07:53:48 (19.76 KB/s) - `test2.html' saved [7480/7480]