Indeed I have this problem also (it also causes errors with google): http://wordpress.org/support/topic/minify-errorinternal-server-error-500?replies=1
I have had no replies in 5 days but I have another thread (which I pretty much resolved myself) from over 4 weeks ago that hasn't had any responses
Do the Devs of W3 not care about their customers?
Poor service at free level will not inspire me to pay for the premium support, quite the opposite... all it will achieve is me looking for another plugin.
From other sites where I have been trying to resolve the problem a lot of people say "Switch to Varnish"