I use serial2 of the atmega2560 to communicate with 8266 and serial3 to ftdi usb/ttl to read debug.
The error message is usually "busy" while trying to obtain IP using AT+CIFSR command.
From the 500 times that I have tried different combinations of code cuts&pastes and from directly commanding the 8266 through atmega328 - 3.3v only 1 time i received ip address.
After running many times the same code, I never managed to get IP address again.
Do you think that using 5v signals instead of 3v3 could be responsible for that ?
I will continue testing tonight, using 1A 3v3 supply, and will attemp to reflash/update the firmware.