socket_set_timeout() works only once. 
This is because the internal function php_sock_fgets() checks the timout flag before calling php_sockread_internal(). If blocking IO  php_sockwait_for_data() is called next. This function resets the socket timeout flag.

A possible solution is to reset the flag in php_sockset_timeout() like the following patch. Removing the timeout flag test from php_sock_fgets() is also possible maybe.

diff -c /usr/src/packages/BUILD/php-4.0.4pl1/ext/standard/fsock.c-orig /usr/src/packages/BUILD/php-4.0.4pl1/ext/standard/fsock.c
*** /usr/src/packages/BUILD/php-4.0.4pl1/ext/standard/fsock.c-orig	Tue Jan 30 11:19:59 2001
--- /usr/src/packages/BUILD/php-4.0.4pl1/ext/standard/fsock.c	Tue Jan 30 11:19:59 2001
***************
*** 596,601 ****
--- 596,602 ----
  	SOCK_FIND(sock, socket);
  
  	sock->timeout = *timeout;
+ 	sock->timeout_event = 0;
  }
  
  #define SOCK_FIND_AND_READ_MAX(max) \