I ran into the same issue after I upgraded to the latest software version. I was doing a restore and STOOPID me unplugged the cable before it was finished...that was the cause of my issue anyways, because when I plugged it back in I received the same error you did.
Originally Posted by jackmk
Running Windows Vista Business as well.
All I did to fix it was (using the same steps you did) create a new user profile in Vista, logged into it, started desktop manager from the new profile, and it recognized my device immediately (same as you correct?)
After that, I did a restore of my backup that I had done earlier that day, completed it, unplugged the device, closed desktop manager, logged out of my newly created Vista profile, and went back to my old Vista profile.
At that point I started desktop manager, plugged in my device, and everything works well now.
Hope this helps...I was banging my head against the wall uninstalling and reinstalling software, drivers, etc.