UM3 setup issue

I am trying to test and configure UM3 load balancer 
(http://www.ultramonkey.org/3/topologies/lb-eg.html) with one director and 
one real web server. Well its not real "load balancing" but I want to test 
the connection forwarding part first in my private network.  Apache is 
running on the real server 192.168.2.1 and listening for 0.0.0.0:80. But 
the connections are not forwarded to the real server, i.e. when I request 
http://192.168.1.2 I am expecting the director to forward the connection 
to http://192.168.2.1. Is that correct? I can on the other hand directly 
request the page and I do get the response. Here is my setup:

ldirectord.cf:
# Global Directives
checktimeout=10
checkinterval=2
#fallback=127.0.0.1:80
autoreload=yes
#logfile="/var/log/ldirectord.log"
logfile="local0"
quiescent=yes

# Virtual Server for HTTP
virtual=192.168.1.2:80
        fallback=127.0.0.1:80
        real=192.168.2.1:80 gate
        service=http
        scheduler=rr
        #persistent=600
        protocol=tcp
        checktype=connect

ipvsadm -L -n :
IP Virtual Server version 1.2.0 (size=4096)
Prot LocalAddress:Port Scheduler Flags
  -> RemoteAddress:Port           Forward Weight ActiveConn InActConn
TCP  192.168.1.2:80 rr
  -> 192.168.2.1:80                        Tunnel  1      0          0 

Can some one point to me, what I am missing? Thanks.

--Turi