Spent a bit stumbling around trying to get MOTP + FreeRadius + Centos 5 working ... this is how I got it working:

This Howto was very helpful (Google translator helps!)
 http://blog.guiguiabloc.fr/index.php/category/openbsd/

The only modifications required beyond the howto is as follows:
1.  Modify otpverify.sh as suggested by Piotr Zazakowny (I just put a 1 in front of all exit codes except the 0 exit code)

2.  Further modify otpverify by adding the following 2 lines right after the PATH statement.  For some reason the "which" statements wig out on centos 5, so we'll just force the right checksum alias instead:

        alias checksum=md5sum
        have_md5="true"

3.  Chown -R radiusd:radiusd /var/motp

2.  Omit the following line from the /etc/raddb/users file suggested by the howto and make sure all other DEFAULT sections are commented out.

          "Exec-Program-Wait = "/etc/raddb/otpverify.sh '%{User-Name}' '%{User-Password}' '%{reply:Secret}' '%{reply:Pin}' '%{reply:Offset}'",