This was due to the cookie settings in the VCL I was using.

I have switched my VCL to the v3 example at:
https://github.com/timwhitlock/php-varnish/tree/master/wordpress-plugin
suggested by:
http://inpropriapersona.com/wordpress-under-nginx-and-varnish-with-w3tc/

now the header reponse is correct and getting a proper age and cache hit.

Age: 879
Cache-Control: max-age=3600, public, must-revalidate, proxy-revalidate
Content-Encoding: gzip
Content-Length: 2612
Content-Type: text/html; charset=UTF-8
Date: Sat, 19 May 2012 17:14:15 GMT
Etag: a6d8e574f9478c059ab06adb49469257
Expires: Sat, 19 May 2012 17:59:31 GMT
Last-Modified: Sat, 19 May 2012 16:59:31 GMT
Pragma: public
Vary: Accept-Encoding,Cookie,User-Agent
X-Pingback: http://veloguru.com/xmlrpc.php
X-Cache: HIT

200 OK

see Velo Guru

For W3TC to work properly with the Varnish cache server, the development version of the plugin is required.

I’m not so happy with the speed of page load, which seems a little slower than sites which are loaded direct from the backend Apache server… needs a little testing and troubleshooting.

Suggestions?

Thanks for this detailed post, Chris!

Cheers!

Virtualmin’s implementation may not be the best or fastest way to run a WordPress site on Nginx, but it is certainly convenient and easy. It’s also very easy to add additional PHP FCGId sub-processes to decrease latency, or to switch to “None”, and have the processes spawn on demand (higher latency, but more RAM frugal, and auto-scaling).

Also, make sure you have the PHP FTP module loaded.

Still unsure about the Minify error. Error reporting has been disabled all along, and I don’t have any problems loading my JS or CSS, so I’m not really sure what it’s harping about. I was able to disable the notification by unchecking General > Settings > Miscellaneous > Verify Rewrite Rules. Kind of scary, but everything seems fine.

Make sure the active NginX Compatibility plugin is PHP5 version if you are on PHP5. Default for that plugin is PHP4.

OR, if everything is working fine, you can disable Minify error notifications in Minify > General

Thanks for the additional info, and I’m glad you got it working.

location / {
if (!-e $request_filename) {
rewrite ^(.+)$ /index.php?q=$1 last;
}
}

Permalinks are now pretty, but W3TC has not stopped complaining.

W3TC refuses to deploy, and is telling me: “It appears Minify URL rewriting is not working. If using apache, verify that the server configuration allows .htaccess or if using nginx verify all configuration files are included in the configuration.”

We know that—but W3TC refuses to deploy even with Minify URl disabled. Neither has an effect on URL rewriting, and everything looks fine when I run the compatibility check.

When I appended the APC settings to /home/domainname/etc/php5/php.ini, was it okay that I placed them toward the bottom of the file?