That tends to rule out the OS and software.
Without the software running, move the sensor close to the console, establish a connection then plug in the USB and see what happens. IIRC I got a popup saying something like new hardware found and installed. Then try firing up the TFA software.
If the sensor drops out, try different USB sockets if you can.
When plugged in it should show up in device manager (XP) under Human Interface Devices as HID complient device and USB human inteface device.
If it works ok you could be on the limit of its range or be suffering from interference.
There is also a setting in control panel - Administrative tools - services - human interface devices access, that must be enabled.