I'm getting this error as well, using a Belkin Easy Transfer cable, all installed correctly and will copy files, but every XIM application I run comes up with an error saying it can't find the XIM (I'm using an Edge).
I've seen this problem crop up many times, but nobody seems to have an answer for it, frankly I'm sick of it, my XIM1 worked beautifully, but the Edge has been a nightmare from start to finish, I have to unplug and replug it on a regular basis as it loses the peripherals.