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Last night we upgraded one of our offices 3560 (WS-C3560-24PS) to 12.2(55) SE6. Below is a copy of the show ntp association and show ntp status.

A sudden change in time can cause big problems for certain running processes so NTP works by speeding up or slowing down the length of a second to gradually make adjustments.

Yes, the kernel will start with the hardware clock on boot since on boot that is it's only reference.

We'll see tomorrow if we can sort out those network/firewall settings.

I'll accept this for now, because most likely the problem is related to those. If I had to guess as to why and assuming you have network connectivity and can see your NTP Host without a problem then it could be you have drifted to a large value.

If the time difference is greater than X (Sorry I dont remember what X is offhand) than a warning will be printed and time will not be syncd.

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If ntpd sees your peer(s), then it should be bringing the system back into sync. I was the admin on several VPS platforms, none of them (openvz, Xen) have access to set the clock on the system. Submit a ticket with your host to indicate the time is off, they should be running ntp and have the time synchronized for you.

shows that my time is accurate to within 0.000216 seconds.

There are many different services such as Kerberos that depend on the time of a Linux system being accurate in order to function correctly.

So we'll be looking at network/firewall settings for this particular server (which is in a different network, accessed over VPN).

16 u - 1024 0 0.000 0.000 0.000 ..though on other machines that command works fine.